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Property liberalization to shore up economic growth

(Xinhua) Updated: 2015-04-01 10:15

Property liberalization to shore up economic growth

Photo taken on Jan 1, 2015 shows an apartment project in Huzhou, East China's Zhejiang province. [Photo/Xinhua]

BEIJING - China's latest moves to relax property curbs surprised the market and sparked fierce discussion on the possible effects of the new policy mix.

However, market consensus is that potential buyers are left with more options in their home purchase decisions and the sagging property sector will be gradually lifted, adding new fuel to the country's economic growth.

On Monday, the central bank and another two government organs announced a cut to the minimum down payment requirement for second home buyers -- to 40 percent from 60 to 70 percent.

Minimum down payments for first and second home purchases using the housing provident fund, which offers urban residents lower rates than those of commercial banks, were also lowered.

Meanwhile, the Ministry of Finance announced on Monday that sales of homes purchased more than two years ago will be exempt from business tax. Previously, the exemption was just for homes bought more than five years.

More choices for buyers

Li Ming, a 26-year-old living in north China's Tianjin, said the new measures are generally good news for potential buyers.

"For ordinary workers like me, the new measures reduced the pressure from down payment requirements, making us more willing to buy and able to afford a home within a shorter period of time," he said.

As a first home buyer, Li's minimum down payment using the housing provident fund was cut to 20 percent from 30 percent, allowing much greater leverage with the same amount of money at hand.

"I'm considering buying an apartment after the release of detailed supporting measures," Li said.

Along with larger leverage, housing demand will also rise as the threshold for home purchases has been lowered.

Living in Shijiazhuang, the capital of Hebei Province, Pang Zhao has been planning to buy an apartment ever since he began working more than a year ago.

He said the easing measures may drive up home prices in Shijiazhuang. "At least, prices are not going to fall any longer."

Pang said he would begin his new home hunting soon and might eventually choose to buy.

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