Interpretation of China's Real Estate Policies: The World's Most Generous Subsidy Program

Recently, Handan in Hebei Province introduced new measures to stimulate the real estate market. According to Chinese media, these measures include:

Subsidy for All Property Buyers

1. Subsidy for All Property Buyers: A subsidy of 1% of the transaction price.

2. Additional Benefits for Specific Groups:

• An additional 0.5% subsidy (1.5%) for college graduates starting new jobs, families with a second child, and seniors aged 60 and above.

• Implementation of supportive housing loan policies.

• The minimum down payment for commercial loans will be adjusted to 15% for the first home and 25% for the second home.

• Reduction of personal housing provident fund loan rates by 0.25%.

• Increase in the maximum provident fund loan amounts to 800,000 RMB for families with two children and 1,000,000 RMB for families with three children.

Unusual Aspect of Senior Subsidies

One particularly unusual aspect of this policy is the increased subsidy for seniors aged 60 and above, encouraging them to buy homes with 30-year loans.

This means seniors would pay off their mortgages until they are 90, indicating the lengths local governments are willing to go to boost real estate sales.

Irony in Policy Approaches

This situation is reminiscent of criticisms once levied against capitalism in Chinese textbooks, where examples were given of capitalist practices such as discarding excess milk or people dying from unpaid mortgage debts. Ironically, China's current real estate strategies mirror these criticized practices.

Wuhan's Huangpi District Policy

Further illustrating the extreme measures taken to stimulate the market, Wuhan's Huangpi District has introduced a policy that offers a 10 square meter reward for local rural residents buying new ordinary commercial housing and a 5 square meter reward for non-local residents.

This policy provides additional square footage rather than reducing prices, circumventing central government restrictions on local government discounts.

Government Efforts and Market Stability

The Chinese government continues to roll out policies to revive the real estate market, attempting to avoid property devaluation by expanding subsidies and support. However, these efforts often have the opposite effect, exacerbating the market's instability.

On the brink of collapse due to the real estate crisis, local governments are resorting to disguised discounts to survive despite central government directives.

Future Outlook

It remains to be seen how effective these new policies will be in the face of these challenges. Stay tuned for our next article analyzing the latest measures to stimulate the real estate market.