This aerial photo taken on October 31, 2021 shows buildings of China's developer Country Garden Holdings in Zhenjiang, in China's eastern Jiangsu province. Photo by STRINGER / AFP
Two of China’s biggest cities lowered mortgage requirements for some homebuyers following central government guidance, fanning expectations that more will follow suit to arrest a record housing slowdown.
Shenzhen, China’s least affordable city for housing, and the southern metropolis of Guangzhou issued notices on Wednesday that they no longer disqualify people who’ve ever had a mortgage - even if fully repaid - from being considered as first-time homebuyers. That would make them eligible for smaller downpayment thresholds and lower mortgage rates.
The moves came days after the central government granted leeway for local officials to execute such policies, in a bid to revive demand from homebuyers that has been shattered by the two-year property crisis. The easing spurs hopes that Beijing and Shanghai, China’s two most important cities, may follow suit and dial down a policy-tightening cycle.
China’s real estate sector is now unraveling, with Country Garden Holdings Co. posting a record loss and risks spreading to the country’s $60 trillion financial system. So far officials have refrained from resorting to a large-scale bailout for the industry, spurring concerns about the economy and putting the government’s 5% growth target at risk.
"Easing by the two major cities on the same day helps stabilize market sentiment,” said Yang Hongxia, general manager for southern China business at China Index Holdings. "It’s possible for Beijing and Shanghai to follow them.”
That said, skepticism remains. The South China Morning Post reported that Shanghai is unlikely to take drastic action, fearing rampant fund flows into its housing market.
