On April 28, Chengdu issued the “Notice on Policies and Measures to Further Optimize the Stable and Healthy Development of the Real Estate Market”, which mentions that housing transactions throughout the city will no longer review eligibility to buy homes, that is, they will no longer review housing purchase conditions such as household registration and social security, and will no longer limit the number of units purchased.
Since 2024, the four major first-tier cities of Guangzhou, Shanghai, Beijing, and Shenzhen have successively introduced new property market policies to optimize housing purchase restriction policies within the region, but there are differences in specific tool choices. This is in the context of the Ministry of Housing and Construction fully granting autonomy to urban real estate regulation, and each city adjusts real estate policies according to local conditions, which helps promote the steady and healthy development of the real estate market.
Furthermore, recently, the Central Bank, the Monetary Authority, and the Ministry of Housing and Construction have all voiced strong support for real estate industry financing, including operating property loans that can be used to repay housing companies' stock loans, optimize personal housing loans, and accelerate urban real estate financing coordination mechanisms. Intensive optimization of policies on both sides of the industry is expected to form a joint effort to promote steady market recovery, and the new and second-hand housing markets in core cities are expected to take the lead in recovering.
Chengdu has completely lifted purchase restrictions. The signal and substance are of great significance
Chengdu issued a new property market policy. Housing transactions throughout the city will no longer review eligibility for home purchases, that is, purchase restrictions will be completely lifted. In 2023, against the backdrop of the overall decline in the national property market, the Chengdu market performed well. Since 2024, the Chengdu market has weakened. As of April 26, new housing transactions were 3.96 million square meters, down 38.4% year on year, and second-hand housing transactions were 6.09 million square meters, down 18.5% year on year. We expect that after the introduction of this new policy, the downward trend in the Chengdu market is expected to reverse. Since 2024, several key cities, including four first-tier cities, have successively loosened their purchase restriction policies. After the policy was introduced, the market response was positive. The relaxation of purchase restriction policies is of great significance in releasing demand for home purchases and promoting the recovery of the property market. Cities that currently maintain purchase restriction policies are expected to continue to relax in the future.
Incident: On April 28, Chengdu issued the “Notice on Policies and Measures to Further Optimize the Stable and Healthy Development of the Real Estate Market”, which mentions that housing transactions throughout the city will no longer review eligibility for home purchases, that is, they will no longer review housing purchase conditions such as household registration and social security, and will no longer limit the number of units purchased.
Brief review: Chengdu completely abolishes purchase restrictions. Chengdu issued a new property market policy. Housing transactions throughout the city will no longer review eligibility for home purchases, that is, purchase restrictions will be completely lifted. Chengdu began implementing the purchase restriction policy in October 2016. Until May 2022, the policy began to be gradually loosened, including the total number of units purchased by households in suburban districts and counties and the increase in the number of units purchased by households with many children. In September 2023, Chengdu officially abolished the “5+2” area (i.e. Tianfu New Area Direct Administration Area, Southern High-tech Zone Park, Jinjiang District, Qingyang District, Jinniu District, Wuhou District, Chenghua District), and purchase restrictions outside the region have been further relaxed.
After the introduction of the new policy, the downward trend in the Chengdu property market is expected to reverse. In 2023, against the backdrop of the overall decline in the national property market, the Chengdu market performed well. New housing transactions were 19.34 million square meters throughout the year, up 4.8% year on year, and second-hand housing transactions were 21.14 million square meters, up 48.9% year on year. In particular, after the introduction of a new policy to abolish purchase restrictions for large units and suburbs, the results were remarkable. In October, new and second-hand housing transactions increased 22.5% and 28.0%, respectively. Since 2024, the Chengdu market has weakened. As of April 26, new housing transactions were 3.96 million square meters, a year-on-year decrease of 38.4%, and second-hand housing transactions were 6.09 million square meters, a year-on-year decrease of 18.5%. We expect that after the introduction of this new policy, the downward trend in the Chengdu market is expected to reverse.
Since 2024, key cities have successively loosened purchase restriction policies. Since 2024, a number of key cities, including four first-tier cities, have successively loosened purchase restrictions. Previously, Suzhou and Changsha had completely lifted purchase restrictions, and Hangzhou lifted second-hand housing purchase restrictions. After the purchase restriction policy was relaxed, the market response was positive. For example, Shanghai relaxed purchase restrictions for single non-domiciled people outside the Outer Ring Road in January. Due to the impact of the Spring Festival in February, new and second-hand housing transactions increased by 67.8% and 20.0% respectively compared to January. Shenzhen lowered the social security payment period requirements in February, and new and second-hand housing increased 26.1% and 14.2% respectively in March compared to January. The relaxation of purchase restriction policies is of great significance in releasing demand for home purchases and promoting the recovery of the property market. Cities that currently maintain purchase restriction policies are expected to continue to relax in the future.
Risk warning: The main risk in the real estate industry is that sales, carry-over, and credit repair of housing enterprises may fall short of expectations:
1. Sales fall short of expectations: Real estate market sales are still bottoming out, and there is a risk that they will continue to decline or fall short of expectations in the future;
2. The carry-over falls short of expectations: Weak sales lead to poor sales repayment by housing enterprises, tight funding sources, and the construction progress of the project may be affected, or the carry-over falls short of expectations;
3. Credit recovery for housing enterprises falls short of expectations: There is still a possibility that some highly leveraged housing enterprises will go into insurance, causing the overall credit repair progress of the industry to be slow, affecting the financing scale and financing costs of housing companies' open market debt, which in turn has led to increased pressure on the completion of the industry and cash flow.
Editor/Jeffrey