By Zhu Jin, Huang Xiaotian
On May 9, the Hangzhou Housing Security and Real Estate Administration issued a notice on optimizing and adjusting the real estate market regulation policy, completely abolishing housing purchase restrictions. In addition, this new policy has also optimized property market policies in multiple dimensions, such as controlling land supply, easing initial certification, and the ability to buy a house and settle in. Since 2024, the Hangzhou property market has weakened significantly. In January-April, new housing sales were 1.45 million square meters, a year-on-year decrease of 49.5%. It is expected that after the introduction of this new policy, the Hangzhou property market is expected to stabilize. Recently, key cities have intensively introduced policies to loosen purchase restrictions. It is expected that the pattern of optimizing regulation policies for first-tier cities to main urban areas and completely abolishing purchase restrictions in second-tier cities will accelerate.
Purchase restrictions have been completely lifted in Hangzhou. This is following the lifting of city-wide second-hand housing purchase restrictions in Hangzhou on March 14 this year, which further released the eligibility to buy new homes in the main city, and completely abolished the city's housing purchase restrictions. The Hangzhou property market is one of the trends in the Chinese property market, and policy changes have attracted market attention. The purchase limit can be traced back to 2011. Since then, it has gone through a series of changes such as cancellation, restart, increase, and increase of the purchase limit in 2014, 2016, 2017, and 2021, respectively. Since May 2022, Hangzhou has begun this round of purchase restrictions and easing. The content mainly includes buying second-hand housing and abolishing social security requirements for families that have settled for less than 5 years. Since then, in October 2023, the purchase restriction policy was further relaxed, reducing the number of restricted purchase zones from 9 to 4, and you can buy a house directly if you settle in Hangzhou. The city's second-hand housing purchase restrictions will be lifted in March 2024. So far, purchase restrictions have been completely lifted.
Control land supply, ease initial certification, be able to settle in home purchases, and optimize property market policies in multiple dimensions. In addition, the new policy proposes deepening the real estate linkage mechanism to optimize the land supply model and promote the balance between supply and demand in areas where housing supply is high and removal is slow; buyers who have no housing within the urban area of the purchased house, or who only have one home unit and are being listed for sale, can be certified as the first housing unit when applying for a mortgage loan; and non-municipal domiciled persons who have obtained legal property rights in the city can apply for settlement. Property market policies have been optimized in terms of housing land supply, initial housing certification eligibility, settlement, etc., which is conducive to the high-quality development of the Hangzhou property market.
The downward pressure on the market was strong during the year. After the introduction of the New Deal, the Hangzhou property market is expected to stabilize. In 2023, in an environment of overall decline in the national property market, the Hangzhou market bucked the trend. According to data from the Hangzhou Housing Administration, annual sales of new homes in Hangzhou were 8.912 million square meters, an increase of 3.3% over the previous year, and 4.203 million square meters of second-hand housing transactions, an increase of 46.8% over the previous year. Since 2024, the Hangzhou property market has weakened significantly. In January-April, new housing transactions were 1.45 million square meters, down 49.5% year on year, and second-hand housing transactions were 1.31 million square meters, down 6.7% year on year. It is expected that after the introduction of this new policy, the Hangzhou property market is expected to stabilize.
Recently, key cities have intensively introduced policies to loosen purchase restrictions. It is expected that the pattern of optimizing regulation policies for first-tier cities to main urban areas and completely abolishing purchase restrictions in second-tier cities will accelerate. Recently, several core cities have introduced policies to relax purchase restrictions, including Beijing optimizing the housing purchase restriction policy after a lapse of 13 years, adding 1 housing purchase target outside the 5th Ring Road; lifting purchase restrictions throughout the city of Chengdu and Changsha; Tianjin liberalizing purchase restrictions for new homes above 120 square meters in the six districts of the city; and single households with two children domiciled in Shenzhen who are not registered in the city and can buy 1 additional home in some regions. It is expected that under the new policy tone, the real estate regulation policies of first-tier cities will be optimized to main urban areas, and the formation of a pattern where second-tier cities completely abolish purchase restrictions will accelerate.
Risk warning
The main risks in the real estate industry are that sales, carryover and credit repair of housing enterprises may fall short of expectations: 1. Sales fall short of expectations: sales in the real estate market are still bottoming out, and there is a risk that the future will continue to decline or fall short of expectations; 2. Carryover falls short of expectations: Weak sales lead to poor sales repayment, tight funding sources, and the construction progress of the project may be affected, or the carry-over falls short of expectations; 3. The possibility of some highly leveraged housing enterprises still falling short of expectations: the possibility of insurance for some highly leveraged housing enterprises still exists, causing the overall credit repair process of the industry to slow down or fall short of expectations. The scale of financing and Financing costs, in turn, led to the completion of the industry and increased pressure on cash flow.
Editor/Jeffrey