China Property: Mortgage interest subsidies: Targeted support, modest effect

China announced mortgage interest subsidies for eligible first-home purchases, adding targeted support to housing demand. We expect the direct sales benefit to remain modest, despite the policy signal from greater central government fiscal involvement. We view China's new mortgage interest subsidy as targeted support for first-home demand, with most units sold by lower-ASP developers such as Seazen and Longfor likely meeting the property eligibility thresholds. However, with eligibility capped at <=120sqm, <=CNY1.5mn/unit and CNY1mn of mortgage principal and restricted to first-home buyers, we expect the direct sales effect to remain modest amid still-fragile home buyer confidence. The greater significance lies in the central government's direct fiscal involvement, funding 90% of the subsidy, while the subsidy itself remains modest, at up to c.CNY50k per household over five years (or CNY833 per month);