Published: 11:37, May 30, 2024
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Guangzhou, Shenzhen boost housing recovery hopes
By Wang Ying in Shanghai
Skyscrapers border a lush green landscape in Shenzhen's central business district. (PROVIDED TO CHINA DAILY)

China's property industry breathed a sigh of relief on Wednesday with the latest city-level housing policy improvements taking effect in two big cities — Guangzhou and Shenzhen in Guangdong province in South China.

On Tuesday, both Guangzhou and Shenzhen announced they will ease restrictions on homebuying.

In Guangzhou, nonlocal families can buy residential properties just as local residents do, as long as they have paid local taxes for six months, said a notice published by the city government on Tuesday.

READ MORE: Experts: Curbs on homebuyers may go

The notification, which took effect on Wednesday, specifies six measures to boost the local housing market. One of them is that a diversified credit policy on mortgages will be implemented in accordance with the latest announcements of the People's Bank of China, the country's central bank.

"The prices of both new and pre-owned homes in Guangzhou experienced comparatively large declines in April. The city is also struggling with mounting pressure on new home deliveries and a passive market sentiment," said Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center.

The new policies are also expected to improve real estate developers' liquidity, help destock home inventories and stabilize market expectations, Li said.

In a separate announcement, the Shenzhen city government also announced it will lower both the down payment ratio and mortgage interest rates from Wednesday.

According to the notice, the minimum down payment ratio for individual commercial housing mortgages has been lowered to 20 percent from 30 percent for first-home purchases and to 30 percent from 40 percent for second-home purchases.

"As a city known for high migration levels, Shenzhen has the highest level of nonlocal population among all Chinese cities, and there is a lot of pent-up demand for homes due to a string of purchase restrictions," said Li.

The new measures are likely to boost market expectations and release that demand, Li said.

On Monday, Shanghai removed more restrictions on homebuying by allowing eligible single buyers to buy pre-owned homes in downtown. It also allowed families with more than one child to buy an extra residential property.

The measure took effect on Tuesday with the nine-item notice detailing adjustments to home purchase restrictions, support for reasonable home living requirements for families with more than one child, optimization of credit policies, encouragement for trade-in activities and improvements to land and housing supply.

The impact of these new policies on the market will become discernible in the coming months. Signs to look out for would be a boost to demand, promotion of home transactions and further help to achieve the nation's long-term goals of building a new real estate development model and promoting the high-quality development of the property industry, said Zhang Hongwei, founder of Jingjian Consulting.

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All these supportive measures at city and provincial levels, and optimized policies thereof, are expected to deepen the recovery of market confidence and strengthen market stability, industry experts and analysts said on Wednesday.

"Recent policy optimization will further unleash positive market sentiment and have a demonstrable effect on other cities, including the capital Beijing," said Chen Wenjing, director of research at the China Index Academy.

Chen said recent moves on the policy front will trigger more market activities in major Chinese cities and contribute to market stability as they uphold "the spirit of the Political Bureau of the Communist Party of China Central Committee meeting on April 30".

Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution, said the meeting urged timely delivery of residential property projects, effective solutions to digest property inventories and optimization of existing policies to create new demand.