On May 6, Shenzhen issued a notice relaxing some of the restrictions on the property market in certain areas. However, some industry experts believe that these policies will have little effect on destocking and increasing the volume of second-hand house transactions.
The Communist Party of China’s Shenzhen Housing and Construction Bureau released a “Notice on Further Optimizing Real Estate Policies” on May 6th. Overall, the notice relaxed control policies on the property market from four aspects, easing some of the conditions for property buyers.
According to the notice, residents in Shenzhen without household registration and adult singles (including divorcees) can now purchase one property in non-central areas. The time for continuous payment of personal income tax or social insurance in designated areas in Shenzhen has been reduced from 3 years to 1 year. Shenzhen households with two or more underage children can now purchase an additional property in designated areas. Prior to this, families with Shenzhen residency could buy a maximum of two properties in the city, but with the new policy, multi-child families with Shenzhen residency can now purchase up to three residential properties in the city. The policy has also adjusted the purchasing policy for enterprises and institutions, allowing those that have met certain conditions such as paying taxes totaling 1 million RMB over a year and having 10 or more employees to buy residential properties. Real estate agencies are encouraged to carry out work involving the exchange or renovation of existing properties.
A prominent online figure in the real estate field with over a decade of experience in property marketing, selection, and purchase, known as “Property Sister”, commented on May 6th: “The long-awaited essay on loosening Shenzhen’s property market policies has finally arrived. It is quite different from the previous versions circulated online. However, I feel there is a sense of ‘playing with you’, one word- inadequate.” She believes that the policy mainly revolves around increasing the limited number of buyers to purchase limited properties in non-core areas, but questions how many people are willing to invest in buying properties in non-core areas amidst the overall tough real estate environment.
Furthermore, the policy does not mention reducing the burden of taxes for both buyers and sellers, with no mention of the change in five years to three years for value-added tax. This is seen as unfavorable for boosting the second-hand housing market and improving genuine purchasing power.
“Property Sister” stated: “However, reducing taxes means that landlords have to give up some of their profits. When landlords have no extra resources, they must decide whether to allow more farmers to pay lower rents or be willing to reduce rents for existing tenants during difficult times. Each landlord’s decision is different.”
An online user named “Landlord” commented: “This policy makes it seem like there is a shortage of houses in Shenzhen.”
Another user, “Peak”, remarked: “Everyone is looking for someone to take over.”
Despite various local governments of the Communist Party continuously introducing policies to stimulate the property market, hoping to boost real estate recovery by encouraging people to buy houses, the mainland economy is declining, resulting in reduced incomes for people which leads to downgrading of consumption. This, in turn, causes a decline in property transactions, with new housing inventory continuing to remain high.
According to data from the China Real Estate Information Group (CRIC), as of the end of February 2024, in more than 80% of the 30 key monitored cities in mainland China, the turnover cycle for residential properties exceeds the 18-month warning line. Changchun, Zhuhai, and Dongguan have all exceeded a turnover cycle of 40 months for residential properties.