New | China slashes down payment to buy homes to its lowest level since 2008 at 20 per cent in further stimulus to housing market
Down payment requirement in top cities such as Beijing stays unchanged
China took further action to bolster its housing market by announcing on Tuesday a reduction in the minimum down payment to buy houses to 20 per cent from 25 per cent in most cities.
First-time home buyers can now enjoy a minimum 20 per cent deposit in their mortgages while home buyers with an existing mortgage need to put a minimum deposit of 30 per cent, from the previous 40 per cent, according to a statement by the People’s Bank of China, the country’s central bank.
“This is a very timely policy, ” said Huang Yu, executive vice-president of the China Index Academy, a property research institute. “It can encourage budget conscious migrant workers to buy a house at home during Luner New Year holiday.”
Chinese Lunar New Year is on February 8 and Chinese companies typically offer a bonus ahead of the holiday so that migrant workers can bring money home.
“The down payment requirement is more reasonable now, the previous one was much higher compared to many other countries,” Huang added.
The last time China allowed a down payment of 20 per cent was in 2008 at the height of the global financial crisis.
The decision was made “in order to support home buying and to prop up the stable growth of the property market,” PBOC said.