Home purchase restrictions eased amid cooling market

China's four big state-owned banks seem set to require lower down payments from second-time home buyers amid a sluggish property market.

The four banks, including the China Construction Bank (CCB) and the Industrial and Commercial Bank of China, will soon ease restrictions for second-time home buyers if they have paid back mortgage loans, the Shanghai Securities Journal reported on Tuesday, citing unconfirmed sources.

In interviews with Xinhua on Tuesday afternoon, several CCB sources confirmed that bank's move to ease the restriction.

Xu Xiaojun, a manager of the housing finance and lending department of the CCB Tianjin branch, said many home buyers complain about the down payment asked of them when they wish to buy a bigger house after selling their old one.

Chinese citizens who wish to purchase a second home must place at least a 60-percent down payment, in contrast to 30 percent for first-time buyers. Meanwhile, however, anyone who took out a mortgage on their first home has been required to place a 60-percent down payment on their second home, even after they have sold all homes under their names.

Xu said that the old rule may have curbed speculative investment, but it could also endanger the real needs of people who wish to improve their living conditions by buying a bigger house.

Rapid hikes in property prices over the past few years have forced the government to roll out a raft of restrictive measures, including requirements on higher down payments and 1.1 times the benchmark lending rate for second home purchases, as well as banning the purchase of a third home in Chinese cities, in a bid to curb speculation.

The Shanghai Securities Journal report said that the new rules mean second home buyers who have paid back any home purchase borrowing from the banks will enjoy the same conditions as first-time home buyers.

Wider confirmation by the banks and local governments is under way. Some provinces have already started easing measures in coping with falling home sales.

On Monday, Fuzhou, capital city of east China's Fujian Province, announced that locals will be regarded as first-time home buyers if they have paid back borrowing for their previous home. The cities of Nanjing and Hangzhou have also implemented such a rule, while in central China's Hubei Province, first home buyers can access a 30-percent discount in mortgage lending rates, according to the report.

Analysts believe that such easing measures may also vary in different regions, with favorable policies concentrating more on China's second- and third-tier cities.

Yang Hongxu, vice president of the Shanghai-based E-house China R&D Institute, said that the easing measures are very necessary based on the current market, and the measures will gradually take effect in more regions.

China's property sector extended a cooling trend in August as more cities reported month-on-month price drops. Government data showed that out of 70 major Chinese cities, new homes in 68 saw month-on-month price declines in August, compared with 64 in July.

Hangzhou, the provincial capital of Zhejiang, saw new home prices dropping the most of the 70 cities, down by 2.1 percent from July. New home prices in Beijing and Shanghai dropped by 1.2 percent and 1.3 percent month on month, respectively, the data showed.