Days after China’s central bank announced a slew of measures to stabilize the property market, including cutting mortgage rates and lowering down payment requirements, three of the country’s biggest cities introduced new policies to further ease home buying.

While Guangzhou, capital of southern Guangdong province, completely removed all home purchase limits, the economic hub of Shanghai and the tech metropolis of Shenzhen introduced partial relaxations including lowering down payments and easing purchase restrictions in certain districts.

The new policies were announced late Sunday night, just ahead of the weeklong National Day holiday starting Oct. 1. Guangzhou’s changes take effect today, while Shanghai and Shenzhen will follow tomorrow.

Industry insiders told the Shanghai-based news outlet The Paper that the goal is to lift market expectations and increase transaction volumes during the upcoming holiday, a crucial period for the real estate market.

Starting with the central bank’s recent relaxation of mortgage rates and down payment requirements last week, Chinese authorities have intensified efforts to stabilize the real estate sector.

On Sept. 26, the government introduced stricter controls on new housing construction, adjusted land use policies, and lifted purchase restrictions. Banks were also instructed to boost lending to ensure that ongoing property projects reach completion, marking a coordinated push to reverse the market’s decline.

Highlighting the swift rollout of more measures, China Real Estate News described Sunday’s announcements as a “pivotal moment” for the housing market. The new city-level policies aim to ease home-buying restrictions and improve credit access by reducing minimum down payment requirements, signaling the government’s urgent push to stabilize the sector.

Previously in Guangzhou, non-resident families and single individuals were limited to buying two properties and one property, respectively, in restricted areas, except for properties larger than 120 square meters. Now, both local and non-resident buyers, including single individuals, no longer face eligibility checks, and there are no limits on the number of properties they can purchase.

Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Urban Planning Institute, told domestic media that Guangzhou’s decision to fully lift purchase restrictions is justified, given the sharp decline in secondhand housing prices.

In Shenzhen, property purchase restrictions have been relaxed by district. Families with household registration, or hukou, and single individuals can now buy an additional property in seven designated areas, expanding on the existing two-property limit for families and one-property limit for individuals.

Non-local families and individuals now only need to pay social insurance for one year, down from three years, to buy homes in central areas, while purchases in designated districts are unrestricted.

And in Shanghai, non-locals can now buy property after paying social insurance for just one year, instead of three, in areas outside the city center. Additionally, non-local residents holding a Shanghai residence permit for more than three years, with the required score, are granted the same home purchasing privileges as locals.

Since 2020, more than 20 cities across China have fully lifted home buying restrictions, but the approach in first-tier cities has been more cautious, with gradual relaxations rather than sweeping changes.

In addition to easing home purchase restrictions, Shanghai and Shenzhen have introduced financial measures to lighten the burden on buyers.

Both cities recently lowered the required down payment for first homes to 15%, making it easier for new buyers to enter the market. They also reduced down payments for second homes, with Shanghai lowering it to 25% and Shenzhen to 20%.

In certain areas of Shanghai, like Lingang New Area, the down payment for second homes has been further reduced to 20%, aiming to encourage more property purchases.

Lu Wenxi, an analyst at Centaline Property in Hong Kong, underscored that the reduction in down payments for second homes is more significant than for first homes, making it especially appealing for those wanting to upgrade their housing. The combination of lower down payments and reduced interest rates is expected to cut mortgage costs and make buying a home more affordable overall.

Additionally, both Shanghai and Guangzhou shortened the period for value-added tax (VAT) exemptions on property sales from five years to two. This change means homeowners who sell properties they’ve held for more than two years won’t have to pay VAT, which experts believe will lower transaction costs and boost the housing market.

According to Yan Yuejin, research director at the E-House R&D Institute in Shanghai, the recent policy relaxations in China’s real estate market are among the most extensive in history. He predicts a surge in home purchases during the upcoming holiday, with the favorable policies boosting market confidence.

This is expected to lead to a stronger housing market after the holiday. “The most lenient policy changes we’ve ever seen have started, signaling the beginning of a ‘real estate bull market,’” Yan said.

Editor: Apurva.

(Header image: VCG)