China’s property crisis: Shenzhen cuts down payments for second-home buyers, joining fray of cities trying to revive demand

Name: Anger mounts as China's property debt crisis leaves flats unfinished
Uploaded: 2023-11-23T03:00:56.000Z
Duration: 4 min 49 s
Description: Anger mounts as China's property debt crisis leaves flats unfinished

Authorities are also scrapping a measure restricting the scope of buyers who can enjoy the lower down payments

It will not be enough ‘to drive a meaningful sales recovery,’ says Cynthia Chan at Daiwa Capital Markets

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Shenzhen, pictured, is the second tier-one city in China to lower the down payment ratios for second houses. Photo: Bloomberg

Yulu Ao

Published: 11:00am, 23 Nov 2023Updated: 12:59pm, 23 Nov 2023

Authorities in Shenzhen, China’s technology hub, are reducing the down payment required from people buying a second home, joining a fray of big cities paring back restrictions in a bid to revive the flagging property market.

They are also scrapping a measure that had restricted the scope of buyers who can enjoy lower down payments.

The easing measures, which include lowering the down payment ratio for second houses to 40 per cent of the value of the property from as much as 80 per cent, take effect from Thursday, according to a notice from the Shenzhen branch of the People’s Bank of China.

Shenzhen is the second tier-one city in China to lower the down payment ratios for second houses. In September, Guangzhou lowered the down payment ratio to a minimum of 40 per cent from at least 70 per cent.

At the same time, Shenzhen’s housing authority scrapped the threshold below which homebuyers qualified for lower down payments, enabling more people to benefit.

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Anger mounts as China's property debt crisis leaves flats unfinished

The Housing and Construction Bureau changed the definition of “ordinary housing”, or non-luxury homes, that qualify for lower down payments. In the past, only homes valued at less than 7.5 million yuan (US$1.05 million) fell within this category, making them eligible.