First Home Loan Share Drops in Beijing as Strict Property Controls Take Effect

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First home loans have fallen significantly as a share of total home loans in Beijing following the launch of policies in March to prevent speculative investors from claiming status as first-time buyers.

Data from the Beijing branch of the China Banking Regulatory Commission indicates that first home buyers have seen their share of total home loans in the Chinese capital fall significantly since the introduction of policies to curb their misuse, with a drop from 95.2% at the end of last year to 81.5% at the end of June.

On 17 March Beijing municipality commenced its launch of some of the strictest property control policies in the city’s modern history, including an increase in the down payment for second homes to 60%.

Chinese media reports indicate that as of the end of June the average down payment for first home loans in Beijing had risen to 40%, while the average rate had risen from 0.86 of the prime rate last year to 0.92.

According to domestic analysts the drop in the first home loan share of total home loans is the result of local authorities making it much harder for purchasers to qualify for such lending in the wake of the March policy launch, serving to weed out speculative investors.

The fact that first home buyer loans continue to account for over 80% of home loans, however, points to robust inelastic demand for residential property in the Chinese capital.

Personal home loans are still on the rise in Beijing, although their rates of growth and share of lending have seen overall declines.

As of the end of June the home loan balance for Beijing municipality was 1.57039 trillion yuan, for an increase of 20.7% year-on-year, and a drop in the growth rate to levels last tapped in September 2016.

Personal home loans comprised 25.6% of all new lending in Beijing at the end of June, as compared to 36.2% in the first quarter and 40.3% at the end of last year.

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