Zhengzhou city in China implements property support measures.

Zhengzhou city in China implements property support measures.

Zhengzhou City Implements Measures to Boost Property Market

Property Market

Beijing, 4th August – China’s Zhengzhou city has launched measures to support its property market, including easing home resale restrictions, in what analysts said were the first such moves by a big city heeding signals from policymakers.

In a promising move to revive its property market, Zhengzhou, the capital of China’s central Henan province, has implemented various measures to alleviate the burden on homebuyers and stimulate housing transactions. The new rules, issued by the Zhengzhou housing regulator, include reductions in mortgage rates and down payment ratios, cuts in housing transaction taxes, and home buying subsidies for families with more than one child.

These initiatives have been seen as a positive signal for the market and analysts believe that other tier-2 and even tier-1 cities may follow suit. Nomura, a leading brokerage firm, stated in a research note, “Zhengzhou’s property easing measures will most likely be warmly welcomed by markets, and we expect other cities to follow.”

However, while the measures have been well-received, there are concerns regarding their potential impact. Nomura pointed out that as larger cities lift local property restrictions, it may drain the demand from lower-tier cities, which are major contributors to commodity demand and construction activity. These lower-tier cities account for 70% of national new home sales volume and are considered the real drivers of the market.

Another concern raised by the brokerage firm is that easing restrictions on existing home sales without lifting restrictions on home purchases may lead to an increase in supply and a subsequent decrease in home prices. This highlights the importance of a comprehensive approach to ensure the stability and sustainability of the property market.

In light of these developments, China’s central bank governor has pledged to allocate more financial resources towards private firms, including the property sector. This move further emphasizes the government’s commitment to revitalizing the housing market and supporting economic growth.

The demand for the property sector, which was once a pillar of economic growth, has remained weak in recent weeks. Sales between May and June showed the largest monthly drop this year based on sales per floor area. Acknowledging the significance of adapting to changing market dynamics, the Politburo, a top decision-making body of the ruling Communist Party, stated last month that it is necessary to optimize property policies in a timely manner.

The implementation of measures to boost the property market in Zhengzhou demonstrates the government’s willingness to take proactive steps in response to market conditions. This positive signal is expected to provide a much-needed confidence boost to both homebuyers and developers. As the market responds to these changes, it will be interesting to observe the ripple effects on other cities and the overall trajectory of the property sector in China.