CHINESE regulators eased lending and tax policies on real estate yesterday, as the Central Government seeks to stop a slide in property prices that has put economic recovery at risk.

    The People’s Bank of China (PBOC), in a statement on its website, urged financial institutions to support home purchases using a combination of commercial lending and a housing provident fund.

    The announcement reduces commercial banks’ minimum downpayment requirement for buyers of second homes to 40 percent from 60 percent previously.

    The downpayment for second home loans by persons borrowing from the housing provident fund is now set at 30 percent, provided they have no outstanding mortgages, the statement said.

    First-time buyers using the provident fund need only make a downpayment of 20 percent, the statement said.

    The provident fund is a government-managed program, in which all of China’s employers and employees — basically everyone except farmers, the unemployed and most self-employed persons — contribute to a pool from which employees may borrow for housing purchases.

    All the changes are effective immediately, the statement said.

    The Ministry of Finance, in a separate statement around the same time, said individuals selling an ordinary house are exempt from business taxes if they have owned the house for more than two years, instead of the previous five. It made no mention of other taxes that are typically applied to housing sales, including stamp tax.

    China’s home prices have been sliding for six consecutive months, falling at the sharpest annual pace on record in February.

    Economists warn that the sector’s weakness could put China’s 7-percent GDP growth target at risk if it continues unabated.

    Housing investment underpins demand in a wide variety of sectors, in particular economic heavyweights such as cement and glass, and China’s willingness to tolerate sustained weakness in housing has been blamed in part for negative surprises across the broader economy.

    The central bank said the new policies are to “support residents’ need to live and improve their housing conditions, and promote stable and healthy development of the real estate market.”

    (SD-Agencies)