China property: Shanghai relaxes home buying restrictions, grants subsidies for new flats to revive sector
The authority will also allow more non-local residents to own a house in Shanghai.
People from other parts of mainland China who paid taxes to their local authorities for three years in a row will now be allowed to buy a flat in Shanghai. Previously they would have to have done so for to five years to qualify.
Shanghai has an inventory of new homes of about 8 million square metres, which could take more than a year to digest based on the current pace of sales, according to China Real Estate Information data.
“This new effort represents a significant change in policy focus, moving in the right direction.”
China has rolled out a swathe of policies to clear excess housing inventory and ensure the timely delivery of new homes, as the country embarks on its most ambitious effort yet to rescue the moribund property market and shore up the broader economy.
It came as Vice-Premier He Lifeng called on local governments to purchase unsold homes.
He stressed the importance of the property sector and the need to “carry on the battle” to surmount the risks that unfinished and unconstructed homes represent. The health of the property market is tied closely to social wellness and economic development, He said, according to state news agency Xinhua.
In another move to stimulate demand, the central bank lowered interest rates on loans tied to individuals’ housing provident funds by 0.25 percentage points.
Recent official data showed that the property industry is still in a downward spiral. Prices of new homes in first-tier cities fell 0.6 per cent in April to cap an 11th straight month of decline.
Property investment dropped by 9.8 per cent year on year in the first four months of 2024.
“We think that property prices will remain under downward pressure for now. However, once the issues surrounding purchase price and sizing of unsold homes are resolved, property prices should begin to stabilise,” T. Rowe Price said.
“Even if the discounts are significant, finding a floor on prices will mark an important phase in this crisis and should gradually boost consumer confidence from its currently depressed levels.”