Analysts have said the government’s decision to slash the minimum financial requirement for commercial property investment for the first time in 13 years, will help ease property developers’ capital strain and stabilize housing prices,
The minimum amount of capital needed to jumpstart a new commercial property or an affordable housing project has been lowered from 35% of the total project cost to 20% the State Council said in a statement.
The move was taken as a key adjustment in the government macroeconomic measure to buck the economic downturn and revitalize the ailing property market.
China Daily reported the last adjustment in this regard goes back five years, when the government raised the minimum capital requirement ratio to 35 percent to cool down the sizzling real estate market.
At that time, Chinese commercial banks were not allowed to extend loans to real estate developers who have initial capital of less than 35% of the property project’s total investment.