China said yesterday it will reduce the minimum down payment required for first- and second-time home buyers in most cities, a move aimed at clearing a housing glut in regions outside the country’s major centres. 
The central bank and banking regulator jointly announced they would lower minimum down payments for first-time home buyers to as low as 20%, from the current 25%, in cities that do not have restrictions on purchases. The main cities that have such restrictions are Beijing, Shanghai, Guangzhou and Shenzhen. 
For second-time home buyers, minimum down payments will be lowered to 30% from the current 40%. 
The last time regulators cut the minimum down payment was in September. In December, the government said it would undertake more measures to tackle property inventories, including helping migrant workers buy homes in cities. 
Both authorities said the down payment requirement is still 25% “in principle” across the country, but local governments outside the four restricted cities would have the option to trim this by up to five percentage points. 
The move is intended to “further support reasonable consumption of housing and promote a stable, healthy development of the property market”, the People’s Bank of China and the China Banking Regulatory Commission said in a statement on the central bank’s website yesterday. 
“This is clearly in line with the ‘destocking’ theme in the property market,” said Commerzbank Asia senior emerging markets economist Zhou Hao based in Singapore. 
“We believe that the relaxation of mortgage policy will somewhat help accelerate the destocking process in the lower-tier cities.” 
Economists widely expect Beijing to roll out more stimulus measures such as cuts to interest rates and banks’ reserve requirement ratios. 
There have been signs of improvement in the housing market following stimulus measures rolled out since late 2014. China’s property sales in December were 6.5% higher than a year earlier, while average home prices rose 7.7%. 
Property investment growth, however, continued to slow to its weakest pace in nearly seven years as developers reined in new construction due to oversupply.