(Yicai) Sept. 4 -- Shanghai and Beijing have followed Guangzhou and Shenzhen, China’s other two first-tier cities, in extending a preferential policy for first-time buyers to families that do not own homes in the cities.

Households that do not own a local property and want to buy one are now eligible for a mortgage like first-time buyers, regardless of whether they have taken out a home loan before, according to the changes announced by Shanghai and Beijing on Sept. 1 and Guangzhou and Shenzhen on Aug. 30.

The new policy will reduce the cost for families when buying a home, especially for those with mortgage records elsewhere but no local home and for families who have sold their home to buy a new one, according to China Index Holdings, a real estate analytics platform.

The policy changes in Shanghai and Beijing exceeded market expectations, as they are first-tier cities with relatively stable property markets, said Chen Julan, a senior analyst at CIH’s Shanghai office.

For families applying for a home mortgage as first-time buyers in Shanghai, the down payment has been reduced to 35 percent from 50 percent to 70 percent, and the mortgage interest rate has been slashed to 4.55 percent from 5.25 percent. 

So supposing a property in Shanghai costs CNY5 million (USD690,000), the down payment will now be CNY1.8 million instead of CNY3.5 million before the policy change, while buyers will be lent CNY3.8 million, up from CNY1.5 million.

China's property market turned down again last quarter after a modest rebound in the first three months of this year, said Chen Wenjing, market research director at CIH. Thanks to the latest policy adjustment, core city markets will start to lift and gradually stabilize, driving a nationwide recovery, Chen added.

In Beijing, the down payment was cut from between 60 and 80 percent to 35 and 40 percent, while the interest rate dropped to 4.75 percent from 5.25 percent.

Down payments in Guangzhou fell from 40 percent to 70 percent to 30 percent, and in Shenzhen from 50 percent to 60 percent to 30 percent. The mortgage rate in the former was trimmed from 4.8 percent to 4.2 percent, and in the latter from 4.8 percent to 4.5 percent.

Editor: Martin Kadiev