Beijing relaxes loans curb as capital city finally toes the line to prop up housing market

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The Chinese capital’s housing department said it would lower the down payment by 10 percentage points for homebuyers to stimulate demand

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China’s capital city Beijing has eased homebuying rules to stimulate the market. Photo: Bloomberg

Aileen Chuang

Published: 8:52pm, 26 Jun 2024Updated: 10:32am, 27 Jun 2024

Beijing, China’s capital, has finally joined other major Chinese cities in relaxing home buying restrictions to bolster the property market.

The Beijing Municipal Commission of Housing and Urban Development said on Wednesday that it was lowering the down payment ratio for first-time homebuyers to 20 per cent from at least 30 per cent previously. For buyers of second homes, the ratio is being reduced to 30 per cent for areas outside Beijing’s fifth ring road and to 35 per cent for areas within.

The minimum five-year mortgage rate will be reduced to 3.5 per cent for first homes, according to the housing department. The interest rate on second homes outside the fifth ring road will be cut 3.7 per cent and to 3.9 per cent for second homes within the ring road.

“It is worth noting that the adjustment this time is made regarding to whether the [second-home] location is within or outside the fifth ring road,” said Chen Wenjing, director of market research at China Index Academy. This is consistent with the purchase restriction policy on April 30, which is more conducive to the policy’s implementation and execution, he added.

The move mirrors the decisions of Shanghai, Shenzhen and Guangzhou to lower their mortgage rates and ease home buying restrictions to boost sentiment. The southern city of Guangzhou has the lowest minimum down payment requirement of 15 per cent and 25 per cent for first and second homes, respectively.

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