Two major cities in China, Hangzhou and Xi’an, have eliminated all remaining curbs on home-buying in an effort to revive the struggling real estate sector and spur growth in the economy. Hangzhou, home to tech giant Alibaba and EV maker Geely, has been gradually easing restrictions in the property market since early 2022, with the most recent move being the removal of checks on social security records and household registration status of potential buyers. Xi’an, a city with a population of 13 million, also announced a similar policy change, reflecting a trend of cities making it easier to purchase property.
Chengdu, a city with 21.4 million residents, recently announced the complete elimination of restrictions on home purchases, including no longer reviewing the eligibility of potential buyers based on their household registration status or social security payments. Changsha, the capital city of Hunan province, has also lifted home purchase curbs in an effort to stimulate the property market. The Chinese government has been trying to contain the crisis in the property market, which began in 2020 with a crackdown on excessive borrowing by developers, leading to the collapse of Evergrande and other major developers.
Despite the government’s stimulus measures, such as mortgage rate cuts and relaxing home purchase curbs, the demand for properties remains weak in China. A recent survey by UBS found that Chinese people’s intentions to purchase homes remain tepid, with only 23% of respondents planning to buy a house in the next two years. Factors such as income growth and policy measures like rate cuts and government subsidies were identified as important in boosting confidence in the housing market. Analysts expect the government to potentially orchestrate a bailout of the sector by allowing local authorities to purchase empty properties for social housing purposes.
Following a recent Politburo meeting, the top decision-making body of China’s Communist Party, new measures are being explored to address the housing crisis, including implementing city-specific policies to reduce housing inventory. The survey conducted by UBS also highlighted the importance of factors like job promotion and salary increase in boosting confidence for potential homebuyers. The government’s focus on reducing existing home inventory suggests that more local governments may be allowed to purchase homes directly from the market for social housing purposes. Overall, the Chinese government is making efforts to stimulate the property market and address the ongoing crisis in the real estate sector.
