Several Chinese regions have stepped up home-purchase subsidies. China Index
Academy says provinces, cities and counties issued more than 430 housing-related
measures in the first five months of the year. Measures broadly include easing
restrictive policies, adjusting housing provident fund loans, issuing purchase
subsidies and strengthening urban renewal support. Homebuyers are seeking
further relief such as lower mortgage rates, reduced transaction taxes and
direct subsidies. Li Yujia, chief researcher at the Guangdong Provincial Housing
Policy Research Center, warns subsidies can front-load demand rather than create
net new demand, and sales may revert once subsidies end; if subsidies become
permanent markets may treat them as the new normal and they will no longer
accelerate buying. She says timing and targeted design are critical to direct
scarce fiscal resources to subsidy-sensitive groups.
