BEIJING (Reuters) -China needs more effective implementation measures such as lower home mortgage rates and down payment ratios for first-time home buyers to help spur home purchases, state media quoted the housing minister as saying, sparking a rally in property shares.
Speaking at a recent symposium with property developers and construction firms, Ni Hong, minister of housing and urban-rural development, underlined the significance of meeting residents' essential housing demand and their needs for better living conditions, Xinhua reported late Thursday.
Ni promised efforts to ensure the delivery of presold homes and said mortgage granted to homebuyers could be based on the number of houses they own rather than on their previous mortgage loan record, urging more action across the sector to consolidate the recovery of the property market.
He also called for reduction in tax rates for people who want to upgrade their homes.
China CSI Real Estate index rose roughly 2% on Friday on Ni's reported comments.
"Overall, this move is reasonable, and we expect easing could intensify if sales remain weak," JP Morgan analysts said in a note on Friday, adding the second-home down payment ratio may be subsequently lowered as well.
China's property sector has over the past two years been grappling with a severe debt crisis - initially triggered by government moves to rein in ballooning debt - with many developers defaulting on payments as they struggle to sell apartments and raise funds.
"Stabilizing the construction and property sectors is significant to promoting a broader economic recovery," Xinhua said, citing the Ministry of Housing and Urban-Rural Development.
Ni said the ministry has urged building companies and property developers to actively participate in affordable housing projects, the renovation of villages in cities, and public facility construction.
"It is necessary to deepen the structural reform of the housing supply side, strengthen scientific and technological empowerment, improve the quality of housing, and build 'good houses' for the people," he said.
China's housing market has been a thorn in the country's economic growth, especially more recently, and the government has been stepping up efforts to prop up the debt-ladened and underperforming industry.
Goldman Sachs (NYSE:GS) analysts recently said China's property sector is expected to grapple with "persistent weakness" for years.