Hangzhou mulls cash grant to boost property market

Homebuyers to get up to 30,000 yuan subsidy from city hardest hit by excessive supply

PUBLISHED : Friday, 05 September, 2014, 1:22am
UPDATED : Friday, 05 September, 2014, 4:30am

Hangzhou is considering further relaxing policies to include a cash subsidy to revive a housing market suffering from a glut.

As part of the package, the Yuhang district government will offer eligible homebuyers a subsidy of 1.3 per cent of their purchase amount, or up to 30,000 yuan (HK$37,850), according to online and newspaper reports.

According to the official website of Yuhang district, the measure has not been launched but says it is part of feasible policies it is looking at.

If the subsidy is introduced, it will be the latest policy relaxation in a city hit hard by a housing glut and slow demand.

Hangzhou is at the epicentre of issues confronting the housing sector, according to a report by Moody's last month, describing it as one of the largest and most oversupplied tier-two cities on the mainland.

The capital of Zhejiang province has suffered the biggest monthly fall in new home prices since April among the 70 major cities monitored by the National Bureau of Statistics.

On August 29, the city government scrapped purchase restrictions for homes larger than 140 sq metres after it lifted similar controls on those below that size a month earlier.

Property sales in its main urban area, excluding Yuhang and Xiaoshan districts on the outskirts, soared to 266 units on Friday and then to 356 on Saturday, up from an average daily of 71 when the home purchase restrictions were in force.

Andy Ma, the managing director of property consultant CBRE Hangzhou, said home sales in Yuhang also improved following the relaxation of restrictions.

"But the district is still suffering from an oversupply [of homes]. Compared with other districts, it is under greater pressure to speed up sales," Ma said.

Last month, Sichuan said it would provide subsidies to banks to support lending to homebuyers. The province would offer a 3 per cent subsidy on loans that are offered on benchmark rates or lower to first-time homebuyers in the second half of the year.

Alan Chiang, DTZ's head of residential for Greater China, did not expect many local governments would follow suit because of their financial situation.

"Many of them do not have money to provide subsidies," Chiang said.