China’s central bank announced a mortgage rate cut for homebuyers on 29 September 2024. Following this announcement, Chinese banks are expected to lower mortgage rates for existing home loans by October 31. The cut came in an effort to boost the sluggish sales in the Chinese property market.
Foreigners who have studied or worked in China for at least one year on a valid permit can buy a house in China. This Pacific Prime article will give you a brief outline of what is going on in the Chinese property market, property market stimulus that is being rolled out across China, and our option to keep your property insured in China.
China Announced Mortgage Rate Cut for Homebuyers and Homeowners
On 29 September 2024, the Chinese central bank announced a mortgage rate cut for homebuyers and homeowners. The announcement calls for commercial banks to reduce mortgage rates for existing home loans to no less than 30 basis points below the Loan Prime Rate.
Commercial banks are expected to see through this mortgage rate cut by October 31, 2024. Following this announcement, China’s four largest commercial banks have already issued statements that they will adjust the interest rates according to the central bank’s guidance.
This mortgage rate cut aims to lessen home buyers and homeowners’ burden after the previous mortgage rate cut left existing homeowners with higher-rate loans compared to first-time homebuyers.
The higher-rate loans had left homeowners rushing to pay off their mortgages, adversely resulting in a constriction to households spending and consumption.
The mortgage rate cut is among the multiple stimulus rolled out by the Chinese government to boost the property market.
Economic uncertainty, coupled with the downfall of major real estate developers, has dampened demand in the Chinese property market.
In August, new home prices nose-dived at the fastest pace in almost a decade, and property sales plummeted by 18% in the first eight months of 2024.
Major Cities Eased Home-Buying Restriction
Aside from the mortgage cut, major cities across China have also announced their own measures to drive demand in the property market. Many involved reduced home buying restrictions and a lower down payment ratio.
Up until now, foreigners who have lived or studied on a valid permit for at least one year in China can purchase a property in China. Here are some general restrictions for foreigners to purchase property in China until now:
- Foreigners can buy only one property in China
- The property must be for living in
- The property cannot be rented out
However, some Chinese cities have their own restrictions and regulations for purchasing property in the cities. These include:
- Guangzhou limited non-local homebuyers to two houses for families and one apartment for individuals.
- Shenzhen limited local homebuyers to two properties for families and one property for individuals. Non-locals must have a social insurance payment record of three years to purchase properties.
- Shanghai required three years of social insurance payment record for non-locals to purchase properties
Following the slump in the property market and arrays of stimulus introduced by the government, several major cities have followed suit in easing homebuyers’ burden and restrictions in their cities, including:
Guangzhou
Guangzhou City announced it would remove all home purchase restrictions, including purchasing limits and a minimum six months of tax or social insurance payment record for non-local families.
Shanghai
Shanghai cut its required tax payment record for non-locals from three years to one year and lowered the down-payment ration to around 15% for first homes and around 25% for second homes. Non-locals who hold Shanghai residence permits for more than three years will also be able to purchase homes the same way as locals.
Shenzhen
The Shenzhen government relaxed purchasing limits, allowing non-local families with at least two children to buy two homes from previously only one, and lowered the required social insurance payment record to one year from three years. Families with household registration in Shenzhen could also buy additional properties in designated areas from previous two-property restrictions for families and one-property restrictions for individuals.
Beijing
Non-locals can now purchase homes inside the city’s fifth ring road with a minimum of three years of social insurance or individual income tax payment record, a reduction from the previous five-years requirement.
Keep Your Property Insured in China
Though home insurance is not mandatory during home purchasing in China, you might want to consider additional protection in case of any adverse misfortune on your property, from natural hazards to burglary or simply unfortunate accidents.
Pacific Prime, as an insurance intermediary, can assist you in navigating a wide range of insurance plans, either health plans for yourself and your family or plans for your business and your property.
Our advisors will accompany you from your policy selection to claims handling as well as policy renewal.
Contact us today for a FREE, no-obligation plan comparison!
Disclaimer: Pacific Prime solely represents, operates, and manages locally regulated insurance products and services in the territory of PR China. Any references to Pacific Prime Global Company or Group, the international services, insurance products, or otherwise stated, written or verbally, are for introduction purposes about our overseas network only, as each entity is fully independent.