On the evening of September 29th, major Chinese cities Shanghai, Guangzhou, and Shenzhen successively announced policies to relax property market regulations in hopes of stimulating the real estate market. Among them, Guangzhou completely lifted its local housing purchase restrictions.
Shanghai took the lead among the three cities in introducing policies such as lowering down payment ratios, reducing existing property loan requirements, and allowing non-local residents with at least 1 year of social security contributions to purchase homes. Specifically, for non-Shanghai residents buying homes in suburban areas, the required years of social security or personal income tax payments have been reduced from three years to one year.
Subsequently, the Guangzhou Municipal Government Office issued a notice regarding adjustments to ensure the stable and healthy development of the real estate market, stating that all housing purchase restrictions have been fully lifted. Local and non-local residents as well as single individuals are no longer subject to qualification review or restrictions on the number of homes to be purchased throughout the city, effective from September 30, 2024.
Almost at the same time as Guangzhou, Shenzhen also announced new real estate policies, including optimized purchase restrictions, removal of property transfer restrictions, streamlined price filing processes, and adjustments to value-added tax policies. The key focus was on relaxing purchase restrictions and abolishing restrictions on selling properties.
In response, Yan Yuejin, Deputy Director of E-House China R&D Institute, analyzed to Economic Daily News on the evening of the 29th, stating that “Guangzhou is the first tier-one city to completely withdraw purchase restrictions. In layman’s terms, everyone is eligible to buy property in Guangzhou, which sets a strong example.”
Li Yujia, Chief Researcher at the Guangdong Urban and Rural Planning Institute’s Housing Policy Research Center, also told the Economic Daily News, “Guangzhou has a relatively weaker economic and administrative status compared to Beijing and Shenzhen. The impact of Guangzhou’s relaxation of purchase restrictions is slightly less compared to Beijing and Shenzhen. Moreover, Guangzhou’s second-hand housing prices have seen significant declines among hot cities this year, so the cancellation of the remaining purchase restrictions is not unexpected.”
As of now, among the four tier-one cities in China, Beijing, Shanghai, Guangzhou, and Shenzhen, only Beijing has yet to introduce new relaxation policies for the real estate market.
Several real estate industry professionals told Caixin that Beijing’s related policies are usually the most cautious among tier-one cities. Guangzhou had previously significantly relaxed purchase restrictions multiple times based on local supply and demand dynamics and price trends, so the complete withdrawal of purchase restrictions this time was not unexpected.
Li Yujia believes that the adjustment of purchase, loan, and tax policies in tier-one cities aims to uplift market expectations and transactions as the “Silver October” (October) approaches, contributing to achieving the annual growth targets and stabilizing the market.
Additionally, the People’s Bank of China adjusted mortgage rates on September 29. Commercial banks are required to carry out bulk adjustments to meet the conditions of existing property loans by October 31, 2024. Rates for existing property loans exceeding -30 basis points will be uniformly adjusted to no less than -30 basis points and not less than the minimum markup for new mortgage loans in their respective cities, expected to decrease by around 0.5 percentage points on average.
Moreover, commercial individual housing loans will no longer differentiate between first and second homes, guiding rates on existing first and second homes to decrease to around the national average of new mortgage rates, with a unified minimum down payment ratio of not less than 15%.
Since 2016, when the Chinese authorities imposed harsh controls on the real estate market with its “three red lines” for property developers, China’s real estate sector has been under strict regulation, resulting in a downturn. Despite the comprehensive relaxation of property market regulations aimed at stabilizing the declining trend in the real estate market, the effects have been minimal. Even tier-one cities have not been able to shake off the downward trend in both housing prices and transaction volume. According to the latest data from the National Bureau of Statistics, in August, both new and second-hand housing prices in tier-one cities declined month-on-month, with second-hand prices dropping by 9.4% year-on-year.
To stimulate the economy, the Chinese authorities have announced various measures to boost the property market since September 24, including interest rate cuts, lowering reserve requirements, reducing existing property loan rates, and unifying minimum down payment ratios, providing the financial market with around 1 trillion RMB of long-term liquidity.
In response to this, economic scholar Li Hengqing mentioned to Epoch Times that with an oversupply in the Chinese real estate market and the belief that property prices will continue to drop alongside economic challenges, further interest rate cuts and down payments reductions may not salvage the real estate market.
Many netizens are also skeptical about the property stimulus policies implemented across different regions.
User 0240561 from Tencent stated: “Whether they lift restrictions or not, no one is buying.”
User “Fengyudengta” expressed dissatisfaction: “My boss promised a two-month summer vacation but it’s been three months and no notice to return to work. How am I supposed to buy a house?”
“Wang Yuxing” disagreed with the reduced down payment for home loans: “Lowering the down payment means more loans to repay…”
“Laoxiuyihuan” commented: “Even if house prices are halved, those who couldn’t afford a house still can’t afford one, and those who could afford one are not buying anymore.”
User “q37190779” disclosed: “In many places in Shenzhen, prices have already halved from the peak, but they still can’t sell.”
User “Zheniu” believes that the Chinese authorities should not intervene in the market: “Cancel all official controls and let the real estate market return to the market, that’s the right way!”