Chinese Cities Implement New Policies to Boost Real Estate Market Ahead of Holiday

In a significant move to stabilize the property market, Chinese cities Guangzhou, Shangh and Shenzhen have introduced new policies just ahead of the upcoming national holiday period, in accordance with recent government efforts med at stimulating demand and boosting transaction volumes.

Guangzhou announced full removal of residential purchase restrictions, while Shangh and Shenzhen implemented partial relaxations involving reduced down payments and eased property purchasing regulations. The changes took effect last night for Guangzhou residents and will commence tomorrow for those residing in Shangh and Shenzhen.

Industry insiders explned that the mn goal is to improve consumer sentiment during this important holiday period when real estate transactions are typically high. Following a series of measures including lower mortgage rates, reduced down payment requirements, tightened controls on new housing construction, adjusted land use policies, lifted purchase restrictions and increased ling support for ongoing property projects announced last week by the central bank, these city-level adjustments come as part of China's coordinated effort to stabilize its faltering property market.

The Shangh-based news outlet The Paper has described this sequence of announcements as a pivot for the housing sector. By easing residential purchase limitations and improving credit access through reduced down payment requirements across various districts in Guangzhou and Shenzhen, and in certn areas of Shangh, authorities are ming to stimulate the real estate market amidst concerns over potential stagnation.

Notably, under previous rules in Guangdong province's capital city, non-resident families and single individuals were restricted to owning up to two properties, except for large apartments exceeding 120 square meters. However, these restrictions have now been lifted entirely. The chief researcher at the Housing Policy Research Center of the Guangdong Urban Planning Institute suggested that this move is justified given recent sharp declines in secondhand housing prices.

In Shenzhen's districts, families with local household registration hukou and single individuals are now allowed to purchase an additional property in seven designated areas, expanding on existing limits for families owning two properties and individuals possessing one property.

Non-local residents buying residential properties can now pay social insurance for only a year instead of three years under certn conditions in Shangh's central business district; in other districts the restrictions have been lifted entirely.

As per the Shangh Real Estate News, more than 20 cities across China have fully removed property purchase restrictions since 2020. However, first-tier city strategies were characterized by gradual relaxations rather than sweeping changes.

In addition to relaxing buying regulations, both Shangh and Shenzhen have introduced measures that ease financial burdens for home buyers:

• The down payment requirements for purchasing a primary residence have been lowered from 30 to 15, making it more accessible for first-time buyers.

• For second homes, the down payment requirement in Shangh has dropped to 25, while in Shenzhen it stands at 20 - this applies specifically in certn areas of the city including Lingang New Area where the rate is further reduced to 20.

Lu Wenxi, an analyst from Centaline Property in Hong Kong highlighted that the reduction for second home down payments compares more favorably than primary residence rates, providing significant relief for those looking to upgrade their housing. The combined effect of lowered down payments and reduced interest rates ms at cutting mortgage costs and making purchasing a home more affordable overall.

Shangh and Guangzhou have also shortened the period required to exempt from value-added tax VAT on property sales from over three years to over two years for residential properties held for more than that time frame. This is expected to reduce transaction costs, further stimulating the housing market.

Yan Yuejin, Research Director at E-House RD Institute in Shangh forecasted a surge of home purchases during this holiday period due to government-backed policies med at boosting market confidence and confidence levels among consumers. He predicts a strong performance of the real estate sector after this break, asserting that the most lenient policy changes we've seen are rolling out now, marking the beginning of a 'real estate bull market'.

Editor: Apurva.

Sources:

• Guangzhou District Offers Homebuyers Free ‘Hukou’ Benefitshttp:www.guangdong.gov.cngdsgthg202308t20230808_146751.html

• China Rolls Out Major Stimulus, Cuts Mortgage Rates to Spur Growthhttps:www.reuters.comworldchinachina-roll-out-major-stimulus-cuts-mortgage-rates-spur-growth-report-2023

• China Seeks to Allay Public Concerns Over ‘Housing Pension’ Planshttps:www.cnbc.com20230817china-pensions-residential.html

• Guangzhou District Offers Homebuyers Free ‘Hukou’ Benefitshttp:www.guangdong.gov.cngdsgthg202308t20230808_146751.html

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