Chinese cities makes it easier to buy homes

 

In an effort to revitalize the struggling Chinese property market, two major cities, Hangzhou and Xi'an, have announced the removal of all remaining curbs on home-buying. This move marks the latest attempt by local governments to stimulate the sector and boost economic growth.

Hangzhou, home to tech giant Alibaba and EV maker Geely, has been gradually relaxing restrictions on property purchases since early 2022. The city has now eliminated all checks on potential buyers' social security records and "hukou" household registration status, among other qualifications.

Similarly, Xi'an, a city of 13 million in northwestern China, has also lifted all restrictions on home purchases. Other cities, such as Chengdu and Changsha, have taken similar steps to make it easier for people to buy property.

The Chinese property market has been in crisis since 2020, when the government cracked down on excessive borrowing by developers. The crackdown led to the collapse of several major developers, including Evergrande, and left millions of apartments unfinished. The crisis has had a significant impact on the economy and sparked nationwide protests by homebuyers.

Despite efforts to contain the crisis, including mortgage rate cuts and piecemeal measures to relax home purchase curbs, demand has remained weak. A recent UBS survey found that only 23% of respondents planned to buy a house in the next two years, while 47% had no intention of buying a home at all.

The survey identified income growth and policy measures, such as rate cuts and government subsidies, as the most important factors in boosting confidence in the property market. Respondents also cited job promotion and salary increases as key factors in determining their willingness to buy a home.

Analysts expect the government to take further action to support the sector, potentially including allowing local authorities to purchase empty properties for social housing purposes. The recent Politburo meeting set a more supportive tone for the property sector, prioritizing the reduction of existing home inventory.

The removal of curbs on home-buying in cities like Hangzhou and Xi'an is seen as a positive step towards reviving the property market. However, it remains to be seen whether these measures will be enough to stimulate demand and restore confidence in the sector.