Housing market changes
Based on the measures given by the central government, the transaction taxes has been lowered and payments and mortgage rates been reduced to bolster the sagging real estate market.
But analysts said the measures may not change the situation completely because the current prices have been much out of purchase ability of many buyers.
In order to lower the cost of home buying, the Ministry of finance and the central bank announced that property purchase tax would be lowered to 1 percent for people buying their first home if it is smaller than 90 sq m.
The rate before was 3 percent, while those buying houses smaller than 140 sq m paying 1.5 percent. The new rate will be taken to effect on Nov 1.
If it is the first time buying their house, the down payment ratio will be reduce to 20 percent, and banks will be allowed to charge as low as 70 percent of benchmark lending rates for such mortgages. Both measures are effective today.
Currently the down payment ratio is 30 percent, or even higher. In this case, those buying large luxury houses or in areas where property prices were deemed to be rising too fast.
The ministry and the central bank said the moves are aimed at increasing consumption to shore up the national economy reducing the damage we got from the global the domestic economic slowdown.
Because of the global financial turmoil, the world economy is expected to be further dragged down, which will reduce demand for Chinese exports. There has been obvious reduction in China’s economy.
Based on the opinion of Wang Lina, economist with the Chinese Academy of Social Sciences, the central government moves were expected to be a downturn, but we are still observing how the measures work.
Property prices in 70 major cities rose 3.5 percent in September from a year earlier, the slowest pace in at least three years, down from 5.3 percent in August. In month-on-month terms, they fell by 0.1 percent in September, which was the second month that prices dropped.
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