Financial Services Association, April 18 (Reporter Wang Haichun) Changsha, known as a “model student” for property market regulation, has lifted purchase restrictions and introduced a number of supportive policies.

On April 18, the Housing, Urban-Rural Development Bureau of Changsha City issued the “Notice on Supporting Residents to Purchase and Improve Housing”. The notice took effect immediately and is valid for 5 years.

According to the notice, in order to adapt to the development trend of new urbanization and changes in the supply and demand relationship in the real estate market and meet residents' multi-level and diversified housing purchase needs, those who “trade in” a new home in Changsha can enjoy the first home down payment ratio and preferential mortgage interest rate according to the “buy a house without loan” policy. For those applying for a housing provident fund loan to buy a new home, the maximum loan amount will be raised from the original one.

Furthermore, the notice shows that Changsha will no longer review the eligibility conditions for buyers. Yan Yuejin, research director of Yiju Research Institute, pointed out that this means that Changsha has lifted purchase restrictions.

It is worth mentioning that in 2017, Changsha implemented a purchase restriction policy, and in June 2018, the “anti-house speculation” war was launched, and all aspects of purchase restrictions, sales restrictions, down payment ratios, and home purchase qualifications were tightened. This policy is known by the industry as the strictest new property market policy in the country, and as a result, Changsha was awarded the title of “model student” for regulation.

Analysts said that the strong property market policy introduced by Changsha this time may be related to pressure on the local market.

According to Kerui data, new housing sales in Changsha were 250,000 square meters in March this year, up 123% from the previous month, down 71% year on year; compared with the average for the third and fourth quarters of 2023, they decreased by 38% and 49%, respectively. Cumulatively, new housing sales in Changsha in the first quarter of this year were 600,000 square meters, a year-on-year decrease of 68%.

“Cities such as Changsha and Hefei, which were popular in the early stages, have experienced phased bottlenecks in demand and are currently facing significant pullback pressure.” Kerry analysts said.

Yan Yuejin believes that compared with the new property market policies in other regions, the current policy of Changsha is very characteristic. The lifting of purchase restrictions is not small. More importantly, there is a synergy between the policies proposed by Changsha this time, which has some reference significance for other cities to introduce supporting policies.

“Owners who sell second-hand properties often generate demand to replace new homes. The “buy a new home with a new one” policy introduced by Changsha can enjoy the down payment ratio for the first home and preferential mortgage interest rates according to the 'buy a home without a loan' policy, which effectively reduces the cost for buyers, which helps to further increase local market activity. The correlation between the first two measures is strong, forming an intrinsic logic to encourage and support replacement demand to actively enter the market.” Yan Yuejin said.

Regarding the trade-in format, Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Urban Planning Institute, pointed out that currently it mainly includes three forms. First, developers or state-owned platforms buy old houses, such as Zhengzhou; second, housing enterprises and brokerage agencies prioritize the sale of old houses; and third, they give a certain subsidy to buy homes.

“Currently, every city has three models, but the proportions are different. This time, Changsha has not announced the specific form, but according to public information, there are preferential loan interest rates, purchase restrictions, tax benefits, etc. The details are yet to be introduced later.” Li Yujia said.

It further stated that it is currently necessary for all regions to build reliable platforms to form a linkage effect; considering the trend where immediate payment capacity and expectations are weak, it is recommended to speed up the promotion of direct hand-to-hand transactions between buyers and sellers, secured transfers of second-hand housing, commercial loans to provident fund loans, etc., to reduce transaction costs. Furthermore, introducing multi-pronged measures such as reducing transaction taxes and fees and increasing the discount rate for participating in “trade-in” new homes will help facilitate transactions and stimulate market vitality.