The Beijing authorities announced on September 30th the relaxation of qualifications for purchasing commercial housing, marking the release of real estate market control policies in all first-tier cities within a span of two days.
The Beijing authorities released a notice titled “Notice on Further Optimizing and Adjusting the City’s Real Estate Related Policies” on the evening of September 30th. Starting from October 1st, for non-Beijing household residents purchasing commercial housing within the Fifth Ring Road area, the required length of social security or individual income tax payment prior to the purchase has been adjusted to a continuous payment of three years or more; for purchasing commercial housing outside the Fifth Ring Road, the required duration has been adjusted to two years or more. Additionally, for high-level individuals and urgently needed talents in line with Beijing’s economic and social development needs purchasing commercial housing, the required payment of social security or individual income tax has been adjusted to one year or more.
Furthermore, Beijing also adjusted the individual housing loan policy. The notice stated that the minimum down payment ratio for individuals purchasing their first set of commercial housing loans is no less than 15%; for the second set, it is no less than 20%.
Following Shanghai, Guangzhou, and Shenzhen, who announced the relaxation of real estate market control policies on September 29th, Beijing has now followed suit.
On the evening of September 29th, Shanghai, Guangzhou, and Shenzhen successively announced measures to relax real estate market control policies in efforts to stimulate the housing market.
Shanghai introduced policies such as lowering the down payment ratio, reducing existing house loans, and allowing non-local residents with one year of social security contributions to purchase houses. The Administrative Office of the Guangzhou Municipal Government of the Communist Party of China issued a notice regarding adjusting measures for stable and healthy development of the real estate market, declaring a comprehensive loosening of home purchase restrictions within the city, with no further qualifications for housing purchases by local and non-local households and singles in the entire city. Shenzhen also implemented various real estate support policies including optimizing purchase restrictions, lifting property transfer restrictions, simplifying price filing processes, and adjusting value-added tax policies. The key focus is on relaxing home purchase restrictions and abolishing sales restrictions.
To cool down the real estate market, the Chinese authorities set “three red lines” for real estate enterprises in 2016, starting strict controls over the real estate market, resulting in a downturn in China’s real estate sector.
In response to the continuous decline in the housing market and the series of bankruptcies in real estate enterprises, the Communist authorities began to relax real estate market controls nationwide more than a year ago. However, the effects have been unsatisfactory. Even first-tier cities have been unable to escape the downward trends in housing prices and transaction volumes. According to the latest data from the National Bureau of Statistics of the Communist Party, in August, both new and existing housing prices in first-tier cities saw a month-on-month decrease, with second-hand housing prices dropping by 9.4% year-on-year.
Regarding the recent wave of policies to relax real estate market controls in first-tier cities, Li Yujia, the chief researcher at the Housing Policy Research Center of the Guangdong Provincial Institute of City Planning, told the “Daily Economic News” that the adjustments in home purchase restrictions, loan restrictions, and tax policies in first-tier cities aim to boost market expectations and transactions, contributing to the annual growth target and stabilizing the market for the rest of the year.
In China, September and October are peak seasons for real estate sales, commonly referred to as “Golden September and Silver October.” However, this September did not live up to expectations for real estate sales nationwide, leaving many real estate enterprises pinning their hopes on October, the outcomes of which remain uncertain.
Chen Wenjing, the director of policy research at the Zhongshi Research Institute, mentioned to Caixin on October 1st that the policies in first-tier cities were nearly in place in the short term, and there is still room for further optimization in restrictive policies in the future. Second and third-fourth tier cities are also expected to increase housing subsidies to stabilize market supply and demand trends.
Despite the efforts to stimulate the housing market through policy adjustments, many netizens are skeptical. Netizen “Fengyudengta” commented: “The boss originally promised a two-month summer break, but it’s been three months, and there’s no notice to return to work. How can I afford to buy a house?”