Shanghai Slashes Home Down Payments, Loosens Buying Restrictions

Shanghai has announced significant measures to invigorate its housing market. The city is drastically reducing down payment requirements and loosening restrictions on home purchases. These bold moves aim to make housing more affordable and accessible, potentially sparking a surge in demand and revitalizing the property sector.

In Shanghai, the minimum down payment for buying a first home will be reduced to 20%. The down payment for a second home will be lowered to 30% in suburban areas and 35% in the rest of the city. This new regulation will come into effect on Tuesday.

Shanghai lowers home downpayments, eases buying curbs

Shanghai, China's major commercial center, has reduced the minimum down payment requirements for homebuyers and eased some purchase restrictions. This move follows the country's earlier decision to lower the national down payment levels in an attempt to stabilize the housing market.

For first-time homebuyers in Shanghai, the minimum down payment will now be 20%. The down payment for second homes will be lowered to 30% in suburban areas and 35% in the rest of the city. These changes take effect on Tuesday. Previously, the minimum down payment for first homes was 30%, and for second homes, it ranged from 40% to 50%.

In addition to lowering down payments, Shanghai will also reduce interest rates on first home mortgages. The minimum interest rate will now be the loan prime rate (LPR) minus 45 basis points, down from LPR minus 10 basis points.

Additionally, Shanghai is making it easier for non-residents to purchase homes. The city will shorten the required length of social insurance and income tax payments that non-Shanghai residents must meet before being eligible to buy property. Furthermore, restrictions on home purchases by divorced couples will be removed.

In an effort to stabilize its struggling property sector, China announced measures on May 17th to reduce down payment ratios for homebuyers and cut mortgage interest rates. The national minimum down payment ratio was lowered to 15% for first-time buyers and 25% for second home purchases.

However, the four major cities of Shanghai, Beijing, Shenzhen, and Guangzhou have traditionally maintained stricter regulations than the national level, requiring higher minimum down payments and mortgage interest rates.

Shanghai's recent policy adjustments, while significant, still reflect this stricter approach compared to the national guidelines. Even with the lowered rates, Shanghai's minimum down payments remain higher than the national level, particularly for second home purchases.

Source: moneycontrol‍