China announces new policy to boost property sector
China announced late on Wednesday an array of policies, including tax exemption and mortgage deposits reduction, to boost the falling real estate sector amid the global economic downturn.
The People’s Bank of China, the central bank, said in a website circular late on Wednesday that the down payment for an initial purchase of housing with a floor space of more than 90 square meters for self use could not be less than 20 percent. Previously, the figure was 30 percent.
The new practice will take effect Oct. 27.
The interest rates on a mortgage for first time home buyers would be cut by 0.27 percentage points to boost domestic consumption. The floor for interest rates would be lowered to 70 percent of the central bank’s benchmark rate, the central bank said.
It said the adjustment was made to offset the negative impact brought about by the widespread global financial crisis and to stimulate domestic consumption amid the world economic slowdown.
The new policy demonstrated the central government’s determination to stabilize the property market and to maintain economic growth, said Hua Wei, a professor with the Shanghai-based Fudan University.
The tax incentive can not be deemed as only to stimulate the sector of real estate, it is also part of the macro economic policy adjustment, according to Bai Jingming, deputy director of the Fiscal Science Research Institute of the Ministry of Finance.
China’s economic growth slowed down to 9.9 percent in the first three quarters as the spreading credit crisis dampened foreign demand for Chinese goods.
The stability of the property sector is significant for the national economy as the sector contributes a quarter of domestic fixed asset investment.
The sector, once overheated, plunged into recession as the government had limited bank loans for property developers in a move to restrain the runaway housing prices.
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