On October 17th, after shanghai loosened the property purchase restrictions and reduced the down payment ratio for commercial loans, it further optimized the housing provident fund policy.

On the afternoon of October 17th, the Shanghai Housing Provident Fund Management Committee issued a notice adjusting the individual housing loan policy of the housing provident fund.

The notice specifies that for the second improved housing, the minimum down payment ratio is adjusted to 25%; for the second improved housing, and if the purchased housing is located in the China (shanghai) free trade zone Lingang new area, as well as Jiading, Qingpu, Songjiang, Fengxian, Baoshan, Jinshan 6 districts of shanghai, the minimum down payment ratio is adjusted to 20%. This notice will be implemented from October 18, 2024.

In addition, shanghai has also made adjustments to housing provident fund rental withdrawal business, including increasing the rental housing withdrawal amount, optimizing the withdrawal processing mode, and more.

Director Zhang Bo of 58 Anjuke Research Institute pointed out that the latest housing provident fund policy issued by shanghai will have a more obvious impact on the demand for second improved housing.

"Due to the significantly higher commercial loan interest rates for second homes in shanghai than housing provident fund rates, most homebuyers will choose a combination loan to reduce the monthly payment pressure. Therefore, shanghai's adjustment of housing provident fund loan down payment ratio will play a certain role in lowering the 'boarding' threshold for such demand," Zhang Bo said in an interview with reporters.

He further pointed out that the latest policy especially includes measures for Jiading, Qingpu, and other 6 districts. These areas are mostly outside the central urban area of shanghai. Because these few districts are the focus of a large number of first-time improvement property buyers, further lowering the housing provident fund loan threshold will be more conducive to entering this type of demand into the market.

Analysts believe that the starting point of Shanghai's housing provident fund policy is to match the down payment ratio policy of commercial loans, in order to further stimulate the vitality of demand for improved residences.

Prior to this, Shanghai introduced property market policies on September 29th, shortening the social security/individual income tax years for non-Shanghai residents buying residences outside the outer ring road to 1 year, and residents holding residence permits for over 3 years and meeting the points criteria enjoy housing purchase benefits for Shanghai residents. Additionally, one additional residence can be purchased in the Lingang New Area. While relaxing purchase restrictions, Shanghai also reduced the down payment ratio for mortgages, lowered the minimum down payment ratio for the first home to 15%, adjusted the down payment for the second home from "not less than 35%" to "not less than 25", and revised the differentiated policy regions from "not less than 30%" to "not less than 20%"; the VAT exemption period has been changed from 5 years to 2 years.

Looking at the changes in market prices, according to data monitored by the China Index Institute, due to the impact of high-quality improvement projects entering the market, in September 2024, the price of new residential properties in Shanghai increased by 1.26% month-on-month and by 6.78% year-on-year; as for second-hand housing prices, in September this year, the price index for second-hand residential properties in Shanghai fell by 0.8%.

Driven by the new real estate policies, Shanghai's real estate market has shown a noticeable increase in activity.

Online real estate data shows that on October 13th, the number of second-hand housing transactions in Shanghai reached 1334 units, marking the highest single-day record since September last year. According to data monitored by the China Index Institute, from October 1st to 15th, the number of transactions for newly-built commodity residences in Shanghai was 3097 units, a year-on-year increase of 26.4%.

"Since Shanghai has already relaxed purchase restrictions and other related policies at the end of September, combined with the housing provident fund policy, it will form a 'combination of policies', thus exerting a greater impact on the market." Zhang Bo stated.

"Shanghai's adjustment of the housing provident fund policy, by lowering the entry threshold for buyers, helps to unleash demand for improved home purchases, increase market activity to promote stabilization in the real estate market. This move also indicates that there is further room for optimization of real estate policies in various cities." Yan Yuejin, Deputy Director of E-House Research Institute, said.