Hangzhou, a significant city in eastern China, has eliminated all remaining homebuying restrictions. This move represents the latest instance of a local government implementing aggressive easing policies to combat the ongoing property crisis. The announcement was made on the local government’s website on Thursday, revealing that the capital of Zhejiang province will revoke all limitations on residential property purchases and cease evaluating homebuyers’ qualifications. These restrictions, initially imposed in 2016, were removed to facilitate the real estate market’s “stable and healthy development,” according to the statement.
Following the Communist Party’s commitment last week to investigate measures for addressing surplus housing inventory that is exacerbating the nation’s property downturn, Hangzhou has made this significant move. Since the policymakers’ meeting, major cities like Beijing and Shenzhen have only taken gradual easing steps.
Hangzhou’s dramatic move has fueled speculation among investors that other large cities will emulate its lead. According to Jeff Zhang, an analyst at Morningstar Inc. in Hong Kong, “Hangzhou’s comprehensive removal of home purchase restrictions will benefit property stocks and is in line with prior expectations for easing trends.”
Yan Yuejin, research director at E-house China Research and Development Institute, observed, “Hangzhou is sending a strong message that loosening homebuying restrictions can be absolute and conclusive.” “There has been growing criticism that current local easing measures are too limited and gradual, akin to squeezing toothpaste out of a tube.”
On Thursday, a Bloomberg Intelligence benchmark of Chinese developer shares climbed by as much as 8.1%. Since mid-April, there has been a 31% increase due to optimism about more easing measures.
According to Zhang Hongwei, the founder of Jingjian Consulting, which provides guidance to real estate companies, all cities will imitate Hangzhou’s move to eliminate homebuying restrictions, with the exception of Beijing, Shanghai, and Shenzhen, where the housing market is stronger.
The southwestern city of Chengdu completely removed purchasing restrictions last month, joining many smaller cities. The capital of Sichuan province has a population of around 21 million.
Falling values and concerns that financially distressed developers won’t be able to finish building projects have damaged homebuyer morale in China. Major developers saw an approximate 45% decline in home sales in April.
The statement indicates that Hangzhou will also increase credit support for the property sector by lowering mortgage payments for some homebuyers.
