As the stock market takes a much-needed breather from the frenzy during the National Day holiday, the property market in China has seen its own share of action. The stimulus took away some pressure on mortgages before the surge in the stock market boosted morale and consumer sentiment. Municipal authorities in major cities across China then followed up with property policies that would make it easier for many to buy a home.
Starting in Guangzhou on 29 September, then Shenzhen, both in Guangdong province in Southern China, followed by Shanghai and then Beijing on 30 September, all four “tier-1” cities announced their new policies before the “golden week” holidays. Guangzhou announced the most extensive policy changes and became the first tier-1 city to lift all home purchasing restrictions. Individuals and families with hukou in or outside Guangzhou will be able to buy a home, regardless of how many homes they own. Shenzhen and Shanghai have fewer radical changes in their restriction policy.
Beijing is the last one to lift some of its restrictions. Changes include lowering the years of paying social security and income tax in Beijing before a family without Beijing hukou can buy a home from 5 to 3, with special talents being able to purchase a home after paying income tax and social security for 1 year. The down payment proportion has also come down from 20% to 15% for first homes, and from 35% (within 5th Ring Road) and 30% (outside 5th Ring Road) to 20%.
Other major cities have followed suit, from provincial capitals like Wuhan to other populous cities like Wuxi, past restrictions have loosened, and consumer sentiment is much warmer. Nanjing, Jiangsu reported stabilisation and growth in home buying in the last week of September and even the stocks of property developers are surging, due to both the stimulus from the central bank, the Politburo meeting and the local policies. As with the stock market boom, it needs further observation to see if the property policies are effective and sustainable.
