Chinese Cities Guangzhou, Shanghai, Shenzhen Ease Property Purchase Regulations Amidst National Day Holiday Stimulus

After the recent announcement by China's central bank to stabilize the property market through cutting mortgage rates and lowering down payment requirements, three of the country’s largest cities, Guangzhou, Shangh, and Shenzhen took proactive measures to further ease their property purchase regulations. These changes were implemented close to the National Day holiday, ming to boost market activity during this crucial time.

Effective immediately in Guangzhou-the provincial capital of southern Guangdong-home purchasing restrictions have been fully removed. Meanwhile, Shangh and Shenzhen are scheduled to follow suit starting tomorrow. Industry insiders from The Paper attribute these new policies to the goal of lifting consumer expectations and increasing transaction volumes during the upcoming holiday period.

Following China’s comprehensive easing of mortgage rates and down payment requirements announced on September 26th-the national holiday-authorities have stepped up efforts in stabilizing the real estate sector, launching stricter controls over new housing construction, fine-tuning land usage policies, and lifting restrictions on property purchases. Additionally, banks were instructed to expand their ling activities specifically for ongoing property projects to avoid further market decline.

This rapid rollout of additional measures is being described as a “turning point” by China Real Estate News. The latest city-level policies are designed to alleviate barriers to home buying and improve credit access by reducing down payment requirements-signaling the government’s urgent efforts in stabilizing the industry.

Previously, Guangzhou placed limitations on purchases for non-resident families and single individuals with restrictions being limited to two properties in restricted areas except those exceeding 120 square meters. Now, both local residents and non-residents face no eligibility checks and purchase limits irrespective of household size or property size.

Li Yujia from the Housing Policy Research Center at Guangdong Urban Planning Institute argued that this decision is justified given the significant decline in second-hand housing prices within Guangzhou.

Shenzhen has relaxed its property purchasing restrictions by district, allowing families with residency registration to buy an additional property in seven designated regions-the limit being two properties for families and one property for individuals previously.

For non-local residents, the requirement of social insurance payments to purchase homes has been lowered from three years to just one year in central districts. In certn designated areas, this limit drops to zero.

Shangh now requires a one-year social insurance contribution period for non-local residents looking to buy properties outside the city center-a reduction from the previous three years required. Non-local residents with a Shangh residence permit who have scored enough points are granted purchasing privileges equivalent to locals.

Since 2020, more than twenty cities across China have lifted home buying restrictions entirely, but in first-tier cities like Shenzhen and Guangzhou, the approach has been more cautious, involving gradual relaxations rather than sweeping changes.

In addition to easing purchasing regulations, both Shangh and Shenzhen introduced financial measures med at reducing costs for buyers. These included lowering down payment requirements for first homes to 15 and reducing it further for second homes to 20 in certn areas of Shangh.

Lu Wenxi, an analyst from Centaline Property Research Center in Hong Kong, highlighted that the recent policy changes are among the most significant ever seen in China’s real estate market. He predicts a surge in home purchases during this holiday period due to the favorable policies and expects stronger market activity post-holiday.

Yan Yuejin from E-house Research Institute in Shangh states that the most lenient property reforms have started, signaling an initial step towards a 'real estate bull market.'

This comprehensive stimulus plan is expected to propel China's housing market forward after this holiday period by boosting consumer confidence. The unprecedented policy easing underscores the government’s commitment to stabilizing the industry.

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