China seeks to boost property market as economy slows
The level was previously 60 to 70 percent, China's official Xinhua news agency said
SHANGHAI (AFP) - China s central bank on Monday lowered minimum downpayment levels on second homes nationwide, scrapping a key policy originally aimed at controlling housing prices as it seeks to boost the economy.
The People s Bank of China (PBoC), the central bank, said the minimum deposit for individuals buying additional housing would be set at 40 percent, according to a statement on its website.
The level was previously 60 to 70 percent, China s official Xinhua news agency said.
The PBoC said the move was aimed at "supporting residents home ownership and improving housing demand".
The announcement rolls back a four-year-old policy first introduced to try to cool the then red-hot property market as rocketing prices put homes out of the reach of many, raising worries over social unrest.
The move comes as China s growth falters, leading to widespread expectations that policymakers will have to boost the world s second-largest economy through further monetary loosening.
China s gross domestic product grew 7.4 percent last year, the slowest in nearly a quarter of a century.
The central bank has already cut interest rates twice since November and in February it also lowered the bank reserve ratio -- the percentage of funds banks must hold in reserve.
Property investment is a key driver for China s economy, while land sales are a major source of revenue for cash-strapped local governments, which have been feeling the pinch as the economy has slowed.
"The cut (in down payments) will strongly support the property market... especially in first- and second-tier cities," Le Jiadong, a property analyst at Guangfa Securities, told AFP.
"Introducing this policy at this time fits the situation of the property market s development," he said, adding expectations had been for the government to cut the downpayment level to 50 percent.
China s housing prices fell in February, with the average price of a new home in China s 100 major cities edging down 0.24 percent from January to 10,539 yuan ($1,682) per square metre, according to the China Index Academy.
