2022-02-27

Housing Policy Easing Expected in China

Caijing: 多地降低首付比例 楼市“小阳春”仍难再现
In order to repair the sluggish real estate market, local governments and financial institutions have successively introduced various easing policies from the end of 2021 to the present. In recent days, a bigger stimulus than lowering personal home loan interest rates has been unfolding in some cities.

On February 25, Jinzhong, Shanxi Province lowered the down payment ratio for second-home provident fund loans to 20%; on February 18, Nanning, Guangxi lowered the minimum down payment ratio for second-home provident fund loans from 40% to 30%.

Not long ago, Jinzhong, Heze, Nanning and other cities also lowered the down payment ratio for the first home loan.

"Financial Eleven" statistics found that in this round of adjustment, the first to introduce policies to reduce the down payment ratio of housing loans are basically low-level cities below the third and fourth tiers. Most of the adjusted down payment ratio for the first house can be reduced to 20%, and the down payment ratio for the second house is mostly concentrated at 20%-40%.

According to incomplete statistics from the China Index Research Institute, from December 2021 to now, more than 40 cities in China have regulated the real estate market in terms of reducing the down payment ratio, increasing talent introduction, granting housing subsidies, and increasing the amount of provident fund loans.

Many interviewed experts believe that more cities may introduce similar policies in the future, but first-tier and strong second-tier cities will most likely not follow suit. The restoration of the real estate market is affected by multiple factors. After the introduction of one or two policies, the market will not improve immediately. It is unlikely that a "little spring" will appear nationwide in March and April this year.

...Taking Heze as an example, according to the data of the China Index Research Institute, since June 2021, the sales of commercial residential buildings in Heze have experienced a year-on-year decline for eight consecutive months, and in the second half of 2021, they will fall by 45% year-on-year; in January 2022, the price of new houses in Heze will fall by 0.5% year-on-year. , second-hand housing prices fell 2.7% year-on-year.

The downturn in the real estate market has led to a decline in the willingness of real estate companies to acquire land. According to data from the 58 Real Estate Research Institute, the scale of land transfer fees in Heze in 2018 was about 24 billion yuan, while the figure in 2021 was only 6.7 billion yuan.

At the same time, Heze's local finance is increasingly dependent on land transfer income.

According to the data of the National Bureau of Statistics, the proportion of state-owned land transfer revenue in Heze to the general fiscal revenue increased rapidly from 21%-34% in 2012-2015 to 53%-64% in 2017-2020. The national average for 2020 is just 31%.

Local govermnents still rely on land sales for financing infrastructure investment plans.

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