The property market in China continues to contract, prompting Guangzhou to introduce measures to stimulate the real estate market by fully eliminating restrictions on purchases, sales, and pricing, as well as reducing down payment ratios and interest rates on loans.
On June 13, Guangzhou released the “Special Action Plan to Boost Consumption (Draft for Soliciting Opinions),” inviting public feedback on the proposal. The plan aims to “gradually reduce consumption restrictions, optimize real estate policies by completely lifting restrictions on purchases, sales, and pricing, and reducing down payment ratios and interest rates on loans.”
This draft for soliciting opinions considers real estate consumption as an “important part” of revitalizing the overall consumer market.
According to Caixin, Zhang Bo, director of the 58 Anjuke Research Institute, stated that Guangzhou, as a first-tier city, signaling a further possibility of loosened policies for first-tier cities. “This move signifies Guangzhou’s potential to become the first tier-one city in the country to fully eliminate the ‘four restrictions’ – restrictions on purchases, sales, pricing, and loans,” Zhang Bo said.
In fact, Guangzhou has been laying the groundwork for relaxation in real estate policies.
Chen Xueqiang, research director of the South China branch of China Index Institute, mentioned that the comprehensive removal of sales and purchase restrictions indicated in the current “Draft for Soliciting Opinions” had already been fully implemented in May and September 2024, respectively. Although the formal announcement of canceling pricing restrictions had not been made, it is already being executed, with developers needing to record their prices without official guidance.
Regarding credit policies, Chen Xueqiang added that currently, the down payment ratios for first and second commercial loans in Guangzhou are both 15%, with a 3% interest rate for the first commercial loan and a 2.6% interest rate for provident fund loans, which are at relatively low levels. There is room for further reduction in down payment ratios for provident fund loans in the future.
From the current state of Guangzhou’s real estate market itself, policy adjustments are deemed necessary.
Zhang Bo explained that according to the statistics released by the National Bureau of Statistics, Guangzhou faces relatively greater downward pressure on housing prices among first-tier cities. The market for new and existing homes has been on a downward trend this year. Although online data from Anjuke shows that overall listing prices for existing homes stabilized in June, prices in outlying areas such as Baiyun, Panyu, Nansha, and Zengcheng have exhibited more pronounced declines.
“Therefore, by fully removing restrictions on purchases, sales, and pricing, as well as reducing down payment ratios and interest rates on loans, the aim is to eliminate administrative intervention, allowing the market to be governed by supply and demand, boosting real estate transactions, and accelerating price stabilization,” Zhang Bo stated.
Chen Xueqiang also believes that the draft for soliciting opinions clearly expands the scope of cancellation to sales and pricing restrictions, emphasizing the reduction in down payment ratios and interest rates, which is a comprehensive confirmation of existing policies and sends a strong signal of relaxation to the market.
Several analysts pointed out that Guangzhou has previously been a pioneer in implementing loosening measures among first-tier cities, and this new policy may trigger a chain reaction, leading to relaxation in policy restrictions in other first-tier cities.