Shenzhen housing move spurs hopes of easing

2023-11-24 09:13:01China Daily Editor : Li Yan ECNS App Download

A view of a residential project under construction in Shenzhen, Guangdong province, in South China. (CHINA DAILY)

South China's Shenzhen in Guangdong province relaxed curbs on local home purchases by lowering payment requirements for second homes to as low as 40 percent effective Thursday.

Real estate industry experts said on Thursday Shenzhen's move has raised hopes that other first-tier cities might consider similar easing.

Shenzhen sub-branch of the People's Bank of China, the country's central bank, issued a notice late on Wednesday stating that the technology hub will lower down payment ratio for second homes to 40 percent, effective Thursday.

The ratio used to be 70 percent for ordinary housing and 80 percent for non-ordinary housing, according to information in the public domain.

The new measures make Shenzhen the second first-tier city to adjust second-home down payment ratio after Guangzhou, capital of Guangdong province.

On Wednesday, Shenzhen's housing and construction bureau also widened the criteria for ordinary housing, or non-luxury homes, to be eligible for smaller down payments. According to a bureau statement, the requirement that the transaction value must be lower than 7.5 million yuan ($1.05 million) has been removed.

"More families willing to buy homes or upgrade to better homes can benefit from the favorable measures, and the reduced cost of home purchases will help boost market confidence," said Guan Rongxue, a senior analyst with the Zhuge Real Estate Data Research Center.

Housing markets now anticipate more policy relaxations in first-tier cities, especially Beijing and Shanghai, said Guan.

Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution, said Shenzhen's policy adjustment will support reasonable housing consumption requirements, especially for families in need of improved home living.

The introduction of the two measures will effectively lower home buying requirements and cut home purchase cost, which will help spur demand, Yan said.

According to Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center, among the nation's four first-tier cities, Shenzhen has made the greatest number of adjustments to its housing policy.

"Since May 2021, its pre-owned home prices have been declining. And transaction volumes of both new and existing homes are at historical lows," Li said.

Policy easing and adjustments are in line with the nation's vision for new property development, and there is still spacious room for further policy adjustments, he said.

Yang Hongxia, general manager of South China branch of the China Index Academy, said Shenzhen's move comes amid the high frequency of policy adjustments nationwide since September to support the housing market, which is sending positive signals to the market.

"The measures will effectively stabilize market expectations, stimulate the release of inelastic demand and ease requirements for buying better homes, thus deepening the recovery of Shenzhen's real estate market," said Yang.

According to Yang, both Guangzhou and Shenzhen have implemented several new measures in the past week, including raising the proportion of housing provident fund loans, loosening the price cap on land bidding and lowering the payment ratio.

"Against the backdrop of cities implementing different measures as per their local conditions, it is expected that Beijing and Shanghai will announce corresponding supportive policies in a timely manner, so as to enhance market activity and promote the stable and healthy development of the real estate market," Yang said.

Real estate stocks staged a broad rally on Thursday, with Country Garden shares surging 23.53 percent and those of Longfor Group up over 13 percent.

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