Excluding Four First-Tier Cities: Beijing, Shanghai, Guangzhou, Shenzhen
Regions with Continuous Price Decline Compared to Previous Year and Month
[Asia Economy Beijing=Special Correspondent Kim Hyunjung] As the real estate slump, considered a factor in the slowdown of the Chinese economy, continues, the relevant authorities have allowed further reductions in mortgage interest rates.
On the 29th, the People's Bank of China and the China Banking and Insurance Regulatory Commission announced the "Notice on the Gradual Adjustment of Differentiated Housing Credit Policies" and decided to gradually adjust mortgage interest rates. Accordingly, mortgage rates for first-time homebuyers can be lowered until the end of this year. According to the notice, in cities where the sales prices of newly built commercial and residential buildings from June to August 2022 have continuously declined compared to the previous month and the same period last year, interest rate reductions are possible until the end of this year.
In regions meeting the specified requirements, banks and customers can negotiate and decide the mortgage interest rate levels. Local media such as the state-run Xinhua News Agency reported that "this can reduce residents' interest costs and further support rigid housing demand."
According to the trend of commercial housing sales prices in 70 large and medium-sized cities announced monthly by the National Bureau of Statistics of China, during this period (June to August 2022), 23 cities saw new housing prices decline both year-on-year and month-on-month, including 8 second-tier cities and 15 third-tier cities. The four first-tier cities?Beijing, Shanghai, Guangzhou, and Shenzhen?are not included. The 23 cities are Harbin, Lanzhou, Wuhan, Dalian, Tianjin, Shijiazhuang, Kunming, Guiyang, Changzhou, Wenzhou, Luzhou, Weiyang, Yichang, Beihai, Dali, Qinhuangdao, Zhanjiang, Baotou, Anqing, Jining, Changde, Shangyang, and Guilin.
Dong Simiao, Chief Researcher at China Chamber of Commerce Finance, told Chinese media Zhongxin Jingwei, "This is the third time in three years that the authorities have adjusted the lower limit of the initial mortgage interest rate," adding, "In a situation where housing demand is sluggish and the economy is deteriorating, lowering mortgage rates for first-time homebuyers is important and urgent." He further explained, "It has effects such as stimulating new housing demand, spreading signals of market stabilization, and improving willingness to expand consumption."
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