The People’s Bank of China, China’s central bank, and the China Banking Regulatory Commission, its banking regulator, said they would lower the minimum down payment requirement for first-time home buyers to 25 percent, from the previous 30 percent, in cities that do not have restrictions on purchases.
This drop in the down payment requirement applies to major cities other than Beijing, Shanghai, Guangzhou, Shenzhen, and Sanya.
Yan Yuejin, a housing industry analyst with the Yiju Research Institute, explained that, for the past several decades when Chinese residents have been allowed to purchase residential housing, this 25 percent down payment requirement is quite rare.
Yan reasoned that the timing of this policy announcement was meant to stimulate housing sales during the extended China’s national day holiday season that started on October 1. He held the view that the fourth quarter would be good window for home purchase now that the down payment level has come down.
Another analyst, however, Zhang Hongwei, of Tongce Consultancy, did not expect the need for a housing stimulus to go away any time soon, given the downward pressure on China’s economy.
Source: Caixin, October 1, 2015
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