Big Chinese cities are making it easier to buy homes to boost depressed property market

By Laura He, CNN

Hong Kong (CNN) — Two major cities in China have eliminated all remaining curbs on home-buying, in yet another sign that local governments are trying to revive the beleaguered real estate sector and spur growth in the world’s second-largest economy.

Hangzhou, a city of 12.5 million which is home to tech giant Alibaba and EV maker Geely, has been relaxing restrictions in the property market since early 2022. Last October it removed curbs in most districts, and in March loosened restrictions on purchases of second homes.

Now it’s going a step further. Starting from May 9, the city will no longer check the social security records or the “hukou” household registration status of potential buyers, among other qualifications, according to a statement released by Hangzhou Housing Security and Real Estate Administration on Thursday.

Under China’s hukou system, each citizen is required to have only one registered place of residence, determining their access to welfare and other public services.

Xi’an, a northwestern city with a population of 13 million, announced a similar move Thursday.

Other cities have also taken major steps to make the process of buying property easier.

Chengdu, home to 21.4 million residents, announced last week that it will completely scrap restrictions on home purchases starting from April 29. It would no longer review the eligibility of potential homebuyers, including their household registration status, social security payments, or other conditions. No restrictions would be imposed on how many homes people can buy, it said.

Changsha, the capital city of Hunan province,  has also lifted home purchase curbs since last month.

China’s property market has been in crisis since 2020, when the government cracked down on excessive borrowing by developers to rein in their high debt. The crackdown led to the eventual collapse of Evergrande, once the nation’s second largest homebuilder. Other big developers have since become insolvent and millions of apartments have been left unfinished.

Beijing has scrambled to contain the crisis, which has become a major drag on the economy and sparked nationwide protests by homebuyers.

But the stimulus measures rolled out so far, including a series of mortgage rate cuts and piecemeal measures to relax home purchase curbs, have failed to revive the sector as demand has remained weak.

Last week, the Politburo, a top decision-making body of China’s Communist Party, pledged to explore new measures to tackle the housing crisis, including implementing “city-specific” policies to reduce housing inventory.

But a UBS survey on Wednesday said that Chinese people’s home purchase intensions remain tepid.

The share of respondents planning to buy a house in the next two years stayed weak at 23%, the same level as in March 2023, the survey said. The share of respondents having no plan at all to buy a home reached 47%, an all-time high.

Respondents identified income growth and policy measures, such as rate cuts and government subsidies, as the most important factors in boosting confidence.

“Looking forward, job promotion and salary increase remain the top factor that may boost confidence for those with weaker sentiment,” the survey said.

The analysts expect the government might try to orchestrate a bail out of the sector soon by allowing local authorities to buy empty properties.

“The April Politburo meeting set a more supportive tone for the property sector, prioritizing the reduction of existing home inventory,” they said.

“This may suggest that more local governments may be allowed to purchase homes directly from the market for social housing purposes.”

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Xiaofei Xu contributed to reporting.