China lowers housing entry fees to support the real estate sector

China announced this Friday reductions in the entry fees necessary to purchase homes in a new attempt to rebuild the real estatemired in a major crisis for years.

Thus, it is reduced to the fifteen% of the minimum deposit that must be provided by those who wish to acquire their first home, and at the same time 25% for those who buy a second one.

Previously, these percentages were in the twenty% and the 30%respectively.

The measures, which will take effect on May 18, were announced today by the People’s Bank of China (PBOC, central bank) and the National Administration for Financial Regulation (NAFR).

Last year, authorities announced measures to increase the number of people who can be considered first-home buyers, a definition in which local governments can now also include those households in which there is at least one member who does not own a property. in their name, without taking into account whether the family had already requested a mortgage previously.

One of the major factors slowing down the Chinese economy is the crisis in the real estate sector, whose weight on the national GDP – adding indirect factors – was estimated at around 30%according to some analysts.

Many companies in the sector began to present liquidity problems in 2021 after the limitations imposed by Beijing on their ability to finance themselves via leverage, and the consequent distrust of potential buyers translated into a slowdown in the market and a worrying drop in prices due to the fact that Housing is one of the main investment vehicles for Chinese families.

Investment aimed at real estate development plummeted 9.8% year-on-year this month within the framework of the prolonged crisis that the sector is experiencing, according to data released this Friday.

Sales prices of new homes in China decreased by 3.1% year-on-year in April, the National Statistics Office reports today, which represents a more pronounced drop than that of the 2.2% registered the previous month.

This is the tenth consecutive month of decline despite Beijing’s measures to mitigate the impact of the crisis affecting the sector.

Month over month, new home prices fell by 0.6% Regarding the fall of 0.3% of the previous two months.

The Government has announced various support measures in recent months, with state banks also opening multimillion-dollar lines of credit to various developers, whose priority objective has been the construction and delivery of developments sold off plan.

The authorities have also promised “adjust and optimize” the measures on the sector after recognizing “important changes” between supply and demand in the real estate sector.

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