Beijing and Shanghai cut down payments as part of stimulus aimed at reviving housing markets

‘Beijing’s policy change around home purchases has important implications for the whole country,’ senior Fitch Bohua analyst says

Policy changes will ‘better cater to residents’ housing demands and their need to upgrade living conditions’: Shanghai government

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A residential complex in Beijing. Photo: Reuters

Published: 9:40pm, 14 Dec 2023Updated: 1:01pm, 15 Dec 2023

Beijing and Shanghai have rolled out a fresh round of stimulus measures – including cuts to down payment ratios and the extension of deadlines for mortgage repayments – as part of their latest efforts to boost demand in a stagnant housing market.

The Beijing Municipal Commission of Housing and Urban Development, a department under the municipal government responsible for providing and regulating housing, said on Thursday that it is lowering the down payment ratio for first homes to 30 per cent from at least 35 per cent previously, and to 40 per cent from at least 60 per cent for buyers of second homes.

Shanghai’s municipality unveiled its own down payment ratio cuts just hours after Beijing’s announcement. “The policy changes will become effective from December 15 to better cater to residents’ housing demands and their need to upgrade living conditions,” the city’s government said in a statement on its WeChat account.

Earlier, the southern city of Guangzhou took the lead in August in lowering down payment requirements, cutting rates for first-home buyers to 20 per cent from 30 per cent. Down payments for buyers who already owned property in the city were slashed to 40 per cent from at least 70 per cent.

In November, Shenzhen, China’s technology hub and third-largest city by population, lowered its down payment requirements, cutting rates for second-home buyers to 40 per cent from 70 per cent.

“Beijing’s policy change around home purchases has important implications for the whole country,” said Wang Xingping, senior analyst of companies at Fitch Bohua, a wholly-owned subsidiary of Fitch Ratings.