© Reuters. Surveillance cameras are seen near residential buildings under construction in Shanghai, China July 20, 2022. REUTERS/Aly Song
BEIJING (Reuters) – Two of China’s major cities, Suzhou and Shanghai, followed Guangzhou in easing home-buying restrictions, in an effort to boost property sales as persistent weakness in confidence delays a recovery in the crisis-hit property sector.
The eastern city of Suzhou completely relaxed home buying restrictions for new and resale home markets, according to state media The Paper on Tuesday.
Previously, residents in Suzhou were only allowed to buy up to three apartments with less than 120 square metres.
Shanghai also on Tuesday eased some of its home purchase limits, allowing single non-Shanghai householders to buy homes in some areas. They were previously banned from buying property in the mega city, the nation’s financial hub.
The moves comes after Guangzhou last week completely eased purchase limits on large homes.
The property market, once a pillar of the world’s second-biggest economy, has suffered a liquidity crisis since 2021, triggering many developers to default on, or delay, debt payments.
Policymakers have rolled out support measures in recent months to prop up the distressed sector, including easier access to cash for developers, cuts in home mortgage rates and relaxed rules on buying homes.
However, the market still ended last year with the worst declines in new home prices in nearly nine years.
Currently, only eight cities like Beijing and Hangzhou, and Hainan province still maintain purchase restrictions in some areas, according to China Index Academy, a major real estate research firm.
“Large second-tier cities are expected to completely abolish housing purchase restrictions across the board,” said the firm.
A Hong Kong court on Monday ordered China Evergrande (HK:) Group, the world’s most indebted developer with nearly $300 billion in liabilities, to be liquidated after around 18 months of failed negotiations with offshore creditors.
The housing regulator said last week that cities have been given full autonomy in real estate regulation and control, and they can adjust their property policies based on local conditions.
“We still believe mainland China’s property market is charting an extended L-shape recovery, and that national sales will drop again in 2024, by 5%,” said economists at S&P Global Ratings on Wednesday in a research note.
S&P also said the Evergrande Liquidation will amplify subordination risk in China property bonds, but has limited impact on the physical market.