China is to give existing homeowners access to first-time-buyer mortgages as President Xi Jinping battles to stimulate the country’s floundering property market.
The Chinese government has also unveiled short-term tax incentives to encourage people to upsize as part of the latest package of real estate sector support measures announced on Friday.
Under the existing rules, people who have never had a mortgage before can get better deals. The Government now plans to extend concessions to anyone who does not currently have a mortgage.
Mark Williams, of Capital Economics, said this means that existing homeowners who have completely paid off their loans will be able to qualify as first-time buyers.
In some of China’s largest cities, this will halve the cash they need for a deposit.
In Beijing, for example, second-time buyers currently need to have 80pc deposits. First-time buyers need only a 40pc deposit. However, city governments can choose whether or not to adopt the new measure.
The Chinese stock market bounced briefly in response to the government’s announcement, but the gains were reversed almost immediately. It was trading 0.4pc lower by the end of the day.
The proposals are designed to provide a lifeline to the nation’s real estate sector.
It has been in a prolonged slump since the collapse of major developer Evergrande in 2021 and now looks even more at risk as Country Garden, another major developer, is on the brink of default.
The downturn is a major risk to President Xi’s target of 5pc economic growth this year as the majority of household wealth is tied up in real estate, meaning drops in prices hit consumer spending. There is also a major risk to financial stability.
The finance ministry has also announced a temporary tax break for home movers to spur sales.
For a two-year window from the start of 2024, people who sell their homes and purchase another one that is worth at least the value of the one they have sold can get their personal income tax fully refunded.
The measures are the latest in a flurry of booster policies for the housing market that have so far included lower rates for first-time buyers, a nationwide cap on real estate commissions and an interest rate cut.
