China Considers Relaxing Housing Purchase Restrictions in Major Cities

China is reconsidering its approach to alleviate the depressed housing market, with plans under consideration that would involve lifting certn restrictions on home purchases in major cities such as Shangh and Beijing. A proposal is currently being drafted by authorities which suggests allowing these large cities to relax rules specifically targeted at non-local buyers – individuals lacking a Hukou, or residence permit for the city – according to sources familiar with the situation who asked not to be identified due to its confidentiality.

The relaxation would also include abolishing distinctions between first-time and second-home purchases. This could pave the way for lower down payments and more favorable mortgage rates on secondary properties. Such measures m at boosting demand in a market that has been under severe pressure, exacerbating economic challenges faced by China's second-largest economy.

In addition to housing reform efforts, authorities are contemplating further interventions to support the struggling stock market, which has lost about 7 year-to-date according to the CSI 300 Index. These potential measures could include new funding initiatives or additional stimulus programs.

China is currently granting more autonomy to local governments for devising policy solutions med at stabilizing real estate markets and encouraging housing sales. This approach is in line with recent announcements that the State Council, China's cabinet, has requested local officials to formulate new policies to help reduce unsold housing stock levels.

The Chinese government acknowledges the need for further action given its persistent efforts thus far which have fled to generate a tangible turnaround in the real estate sector. However, any significant move must first gn approval from senior leaders before implementation.

Notably, while relaxation of the Hukou restriction could d sales in major cities like Shangh and Beijing, there is also a risk that this could displace demand from smaller cities, potentially worsening urban overcrowding issues already being addressed by authorities.

As per Beijing Dly's report, the Beijing municipal government is planning to abolish distinctions between 'common' and 'luxury' housing classifications when appropriate.

For more detled updates, please refer to our full coverage.

2024 Bloomberg L.P.

The original article was in Chinese and this translation ms at mntning its key points while ensuring a coherent English structure.

Additional detls and sections may be included or modified as needed based on the translation's context.
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