China property: Shenzhen, Wuhan are the latest cities to ease housing market restrictions to stir demand

08/05/2024

Shenzhen and Wuhan have become the latest Chinese cities to ease home purchase restrictions to boost sales, as a growing number of major metropolises take steps to support the country’s slumping property sector and shore up confidence.

Shenzhen, China’s technology hub, said it has lowered the thresholds for the personal income tax and social insurance payments of non-local individuals and families seeking to buy a property in certain districts, while allowing local families with two or more young children to buy additional homes in those areas.

The city lowered its down-payment requirements for second homes in November in a bid to revive the pre-owned homes market.

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“Shenzhen’s latest policy is in line with expectations, and an indication that there will be more policy easing in the country in May,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institute.

“The easing measures are still quite localised at this point, but are very strong nonetheless, especially the part about the social security payment requirements, which will create ample opportunities for those who are interested in buying a house.”

Wuhan, the capital of central China’s Hubei province, unveiled new measures to boost its pre-owned homes market. The city’s housing ministry and other authorities said local families who are seeking to sell their homes and buy a new one can now enjoy lower mortgage rates. In addition, those who have successfully “exchanged” their homes within a designated period of time will be entitled to a certain amount in subsidies.

The authorities of both Wuhan and Shenzhen announced the measures on their websites on Monday.

The moves come after a central government call on April 30 for local authorities to “digest existing inventory” while “optimising policies around new housing.”

“The easing of both pre-owned and new home rules will be an important force to revive the country’s property market,” said Yan.

Other major Chinese cities have recently rolled out measures to encourage home purchases. Beijing, for example, said on April 30 that it would allow locals and non-locals who have fulfilled social insurance payment requirements to buy an additional house on the outskirts of the city.

During the Labour Day holiday period, Shanghai’s real estate association and other industry bodies unveiled an initiative aimed at providing greater benefits to residents seeking to sell their home and buy a new one. Chengdu in southwest China said in late April that it would no longer review qualifications for those interested in buying a house, while pledging greater support for developers’ “reasonable financing needs”.

Shares of Chinese property stocks, especially those of developers facing liquidity issues, went up by an average of 20 per cent on April 29 on the back of favourable policy moves.

New home sales in April by China’s top 100 developers dropped by 45 per cent year on year to 312.2 billion yuan (US$44.1 billion), and by 12.9 per cent compared with March, according to the China Real Estate Information Corporation.

Prices of new homes in China’s 70 medium and large cities fell for a 10th consecutive month in March, dropping 0.3 per cent compared to February.

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