Homebuyers in Beijing are cashing in on the city's most relaxed housing policies since 2011, with some saving over 100,000 yuan in mortgage interest immediately after the latest rules took effect.
"Around 10 p.m. on the 7th, my agent messaged me, saying we could now apply for a 2.4 million yuan provident fund loan. That means we're looking at saving more than 100,000 yuan in interest," said Ms. Li, a homebuyer, in an interview. The Beijing government rolled out new housing policies on the evening of August 7, boosting provident fund loan limits, and Ms. Li was among the first to benefit.
The loan ceiling now matches other major cities like Shanghai and Shenzhen. Ms. Li and her husband had settled on a second-hand apartment in the Lize area of Fengtai District in July, costing over 5 million yuan. Under the old rules, they could only get up to 1.2 million yuan from the provident fund, so they planned a 2.4 million yuan combined loan—half commercial, half provident fund. A delay in the seller's process pushed their loan signing to mid-August. That's when the new policy, announced by the Beijing Municipal Commission of Housing and Urban-Rural Development, the Beijing Municipal Commission of Planning and Natural Resources, and the Beijing Housing Provident Fund Management Center, raised the maximum for couples both contributing to the fund to 2.4 million yuan for a first home.
Ms. Li calculated that with a 30-year, equal-installment loan, a combined loan (commercial rate at 3.05%, provident fund at 2.60%) would cost 9,895.74 yuan per month and total interest of about 1.1625 million yuan. If they use the full 2.4 million yuan provident fund loan, the monthly payment drops to 9,608.15 yuan, with total interest around 1.0589 million yuan. That's a monthly saving of roughly 287.59 yuan and a total interest saving of about 103,600 yuan.
The new rules also allow for further increases—up to 600,000 yuan for single contributors or 1 million yuan for couples—for buyers meeting conditions like being a registered household in the six central districts buying outside them, or purchasing green-certified homes or having multiple children. Additionally, the link between loan limits and contribution years has been optimized.
"The provident fund component is the heaviest hitter in this policy," said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center. Previously, Beijing had the lowest provident fund loan ceiling among first-tier cities, but this near-doubling brings it in line with the others.
On August 8, a visit to a residential project in Tongzhou District showed a bustling sales center, with cars lining the streets and agents waiting outside. A salesperson noted, "My mouth hasn't stopped all day—clients are coming in waves." The project, featuring units under 100 square meters and priced under 4 million yuan, saw many buyers eligible for the full 2.4 million yuan loan. Some clients, who had already sold their city-center homes, could get even higher limits, saving significantly on interest.
At a nearly sold-out project in Tongzhou, another agent said that for couples both contributing to the provident fund, even with a low down payment, the fund loan could cover the entire mortgage. Data from CRIC shows that over 40% of new home sales in Beijing in the first half of the year were under 5 million yuan. Low-priced, small units dominate the second-hand market, with 87.9% of June's transactions under 5 million yuan, according to the China Index Academy. This means the provident fund can now cover most housing loan needs for ordinary families.
Previously, Beijing had relaxed purchase restrictions for non-Beijing residents buying outside the fifth ring road, requiring just one year of social insurance or tax payments. The new policy extends that to inside the fifth ring, cutting the requirement from two years to one. The China Index Academy noted that this brings Beijing's home purchase restrictions to their loosest since 2011, aligning it with Shanghai's threshold.
"The unified threshold for non-Beijing residents across the city will stimulate some demand," said Zhang Dawei, chief analyst at Centaline Property. However, he added that the impact is limited compared to the provident fund boost, and future relaxations could go further, potentially to full removal of restrictions. But with Beijing's strict household registration system, the pool of potential buyers is smaller than in Shanghai, especially for families with school-age children.
Industry experts see the policy shift as a response to falling transaction volumes. Data from the Beijing Municipal Commission of Housing and Urban-Rural Development shows that July's second-hand home registrations dropped 15.5% month-on-month to 14,037 units. New home sales also fell 29% in July from June, per the China Index Academy. Zhang noted that while the spring market in Beijing lasted longer than expected, the July decline, though typical for the season, could hurt market confidence if too sharp.
"The second-hand market's activity hasn't spread to the new home market, and with the secondary market cooling, the new home market could continue to weaken," said Li Yujia. He pointed out that while second-hand transactions hit a five-year high in the first half of 2023, 53% of deals were under 2 million yuan, up 4.9 percentage points from last year.
Looking ahead, Yan Yuejin, deputy director of the Shanghai E-House Real Estate Research Institute, predicted that the policy would boost viewings and transactions for both new and second-hand homes inside the fifth ring road, especially for first-time buyers. "Second-hand transactions are likely to hit new highs, similar to Shanghai's experience after relaxing restrictions in the city center," he said. The China Index Academy echoed this, noting that similar policy shifts in Shanghai and Shenzhen earlier this year led to sustained gains in both new and second-hand home sales.
As a bellwether for the national market, Beijing's policy optimization is expected to lift sentiment and drive demand, paving the way for a more stable market. The provident fund reforms also offer a template for other cities, which may soon follow suit with similar adjustments.
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