In a move aimed at revitalizing the sluggish real estate market in China, Chengdu, the capital city of Sichuan province, announced on Sunday (28th) to no longer review the qualifications for property purchases, completely lifting property purchase restrictions. However, the market response to this decision has been lukewarm.
Starting from April 29th, Chengdu’s Office of the Leading Group for the Stable and Healthy Development of the Real Estate Market issued a notice stating that residential projects in Chengdu will no longer implement public lotteries for house selection, with sales being conducted independently by enterprises. Additionally, there will be no more qualification reviews for property purchases within the entire city.
Chengdu first introduced property purchase restrictions in October 2016, and over time, these policies were tightened, making it one of the cities with the most detailed and complex restrictions among key Chinese cities. In March 2021, Chengdu’s property purchase restrictions reached their strictest levels with the inclusion of foreclosed properties.
The latest policy change in Chengdu marks the official removal of purchase restrictions that have been in place for over seven years and the unified cancellation of public lottery systems for house selection.
Prior to the introduction of the new policy in Chengdu, there was a significant decline in property transactions during the first quarter of the year. According to statistics from the Chengdu Municipal Bureau of Statistics, the sales area of commercial housing in Chengdu decreased by 30.7% in the first quarter, while real estate development investment declined by 12.9%, and the newly initiated area of commercial housing dropped by 29.1%.
Monitoring data from Zhuge Data Research Center shows that in March this year, 8,924 new residential properties and 18,771 second-hand residential properties were sold in Chengdu, marking a decrease of 41.9% and 33.4% respectively compared to the same period last year. The current market sentiment in Chengdu remains unstable, indicating a need for continued policy support.
According to incomplete data, approximately 35 cities across China have relaxed property purchase restrictions since 2023. Among them, 22 cities including Hefei, Kunming, Suzhou, and Changsha have completely lifted purchase restrictions. As of now, except for Hainan, only first-tier cities and core areas of Hangzhou (for new properties), Tianjin, and Xi’an still maintain purchase restrictions among major cities.
Former National People’s Congress member and Director of the Shanghai Academy of Social Sciences Center for Urban and Real Estate Studies, Zhang Hongming, told reporters that Chengdu’s move might create a “short-term bump” in the declining real estate market, but it is unlikely to alter the overall downward trend. He referenced a statement from the Chinese Communist Party’s Central Political Bureau meeting in July last year, highlighting a significant change in the supply and demand relationship in the Chinese real estate market, with supply exceeding demand being a prevailing situation nationwide.
Senior analyst Guan Rongxue from Zhuge Data Research Center stated that based on the experiences of cities such as Nanjing, Hefei, and Suzhou that have already completely lifted purchase restrictions, the local real estate markets did not fully rebound. The current deep adjustment cycle in the real estate market is expected to be protracted, and the actual effects of Chengdu’s policy of lifting purchase restrictions still require further observation.
Financial blogger “Mr. Bao,” shared his views on the X social media platform, expressing regret over the slow pace of lifting purchase restrictions in Chengdu, suggesting that the decision may have come too late to have a meaningful impact amidst the evolving market conditions.