China Loosens Rules to Make It Easier to Buy Housing in Runaway Market

(Beijing) — China’s Ministry of Housing and Urban-Rural Development is accelerating the building of a platform aimed at raising the efficiency of public housing funds, as local governments struggle with real-estate destocking in some smaller cities.

The platform, set to be in service by the end of June, will allow public housing funds – also known as housing provident funds – to be transferred more freely between cities amid the Chinese workforce’s increasingly rapid movement between cities, state broadcaster CCTV reported.

The move is likely to make it easier for employees seeking to tap housing provident funds to buy homes in cities – usually their hometowns – other than the one in which they work.

Runaway housing prices in first-tier cites dashed hopes of owning property for many out-of-towners. As a result, many people working in large cities turned to the more affordable and pragmatic option of buying homes back in their hometowns.

Shanghai in March became the first city in the country to sign up for the platform, About 11 other cities, including Beijing, Guangzhou, Shenzhen and Huangzhou followed suit, CCTV reported.

Housing provident funds are compulsory deposit-like funds that are contributed by employees and employers on a monthly basis. Employees can’t tap into the money from the fund pool if they don’t want to buy property. Housing provident fund loans with maturity terms above five years are offered with a lower interest rate – at an annualized 3.25% – compared with the loans of commercial banks.

Contact reporter Pan Che (chepan@caixin.com)