Stimulating demand, structural reform key to housing market

The Ministry of Housing and Urban-Rural Development stated that strong support will be given to satisfying both rigid and improvement-oriented housing demand. The measures include reducing the down payment ratio and loan interest rates for first-time homebuyers, tax exemptions for those who sell their house to buy a better one, and the "recognition of houses without recognizing loans" for housing loans.

Among them, the last one has garnered particular attention from the market. It mainly refers to a 2017 policy that recognizes both house ownership and a loan record. If a homebuyer already owns one property and wants to sell it to purchase a larger one, he/she would still be required to bear a down payment of up to 80 percent based on the standards for purchasing a second property. Additionally, the mortgage interest rate could be as high as 5.25 percent. It is proposed to optimize this policy so the minimum down payment ratio is reduced to 35 percent, and the mortgage interest rate lowered to 4.75 percent.

Considering the substantial total housing prices in cities such as Beijing, Shanghai, and Guangzhou, "recognizing houses and recognizing loans" effectively increased the entry barrier for the property market and served as an effective measure to curb speculative buying when the property market was overheated.

However, today as the real estate market supply and demand relationship has undergone significant changes, and real estate policies are facing adjustments and optimizations. It's important to note that the move is not a nationwide one-size-fits-all policy and its implementation still needs to suit the local situations of cities.

Policies should not only stimulate demand but also shift towards structural reforms on the supply side of housing. The country should strengthen technological empowerment, and improve housing quality. Construction and real estate companies should actively participate in the construction of affordable housing and urban village transformation.