China to let local governments buy homes, cut mortgage rates to revive property sector

May 17 (Reuters) - China will allow local government authorities to buy some homes at "reasonable" prices to provide affordable housing, Vice Premier He Lifeng told an online meeting on housing policy on Friday, the official news agency, Xinhua, said.

China will cut interest rates of mortgage loans and down-payment ratios for homebuyers to boost lacklustre property demand, according to three statements released by its central bank on Friday.

MARKET REACTION:

China's CSI300 benchmark real estate index (.CSI000952)New Tab, opens new tab jumped more than 4% on the news.

COMMENTS:

"We've seen increased urgency from policymakers to stabilise the housing market, which is welcome news after we saw April's housing prices with the steepest month-on-month decline of the current cycle.

"While it is arguably one of the most important signs of a stabilisation of sentiment in China, it is worth noting that a potential bottoming out of housing prices would only be the first step; elevated housing inventories will likely keep real estate investment suppressed for some time yet, and the property sector will remain a major drag on the economy this year."

"Moves such as the central bank's mortgage rate cuts and reduced down payment ratios suggest Beijing is starting from the demand si...
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