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Wednesday, September 30, 2015, 18:14

China cuts down payment requirements

By Agencies

BEIJING - China on Wednesday said it will cut the minimum down payment level for first-time home buyers in many cities, stepping up support for the sluggish property market and stumbling economy.

It was the second measure in two days to fire up consumption following a government decision to halve the tax on the sale of small cars.

The central bank and banking regulator said they would be lowering minimum down payments for first-time home buyers to 25 percent, from the previous 30 percent, in cities that do not have restrictions on purchases.

The move is intended to "support reasonable consumption of housing", the People's Bank of China and the China Banking Regulatory Commission said in a statement on the central bank's website on Wednesday, dated Sept 24.

China's property sector has hit a weak patch in the last year or so, with slowing sales leading to an overhang of unsold apartments and affecting demand for everything from steel to home appliances and furniture.

"The relaxed rule is helpful but the impact will not be immediate because the main reason for high inventory in some cities is bad location and transportation," said David Ji, Greater China head of research & consultancy at Knight Frank.

"The new rule will likely stimulate demand from buyers who are already observing on the sideline and help them to get into the market," Ji added.

In a separate move on Wednesday, the housing ministry asked local governments to increase financial support to home buyers funding their purchases with housing provident funds.

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