Shanghai Gives More Homebuyers First-Time Status to Boost Market

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Shanghai lowered mortgage requirements for some homebuyers following central government guidance, loosening barriers for property ownership in one of the country’s most prized locations.

The city will no longer disqualify people who’ve ever had a mortgage — even if fully repaid — from being considered as first-time homebuyers, as long as they don’t own a property, according to a joint statement from four regulators including People’s Bank of China Shanghai branch. That would make such buyers eligible for smaller downpayment thresholds and lower mortgage rates.

The moves came days after the central government granted leeway for local officials to execute such policies, in a bid to revive demand from homebuyers that was shattered by the two-year property crisis. Guangzhou and Shenzhen took similar steps and downpayments were cut across the nation that exceeded expectations.

“The recent easing since last week has exceeded expectations,” Betty Wang, senior economist at Australia & New Zealand Banking Group, said before the announcements in Shanghai. China’s home sales are slumping, while Country Garden Holdings Co. is on the brink of a default. Risks are spreading to the country’s $60 trillion financial system. So far officials have refrained from resorting to a large-scale bailout for the industry, spurring concerns about the economy and putting the government’s 5% growth target at risk.

 

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