Shanghai eases homebuying rules in sign of China property relief

[SHANGHAI] China’s financial hub of Shanghai eased homebuying rules, in the latest attempt by authorities to contain the nation’s prolonged property slump.

The city now allows non-resident homebuyers who have paid social security or individual tax for one year to be eligible to purchase homes in urban areas, according to a statement on Wednesday (Feb 25). Previously it required those without local household registration to pay social security or individual tax for three years before becoming eligible.

China’s property downturn has persisted for more than four years, weighing on the economy and sending cash-strapped developers into distress. China Vanke, once the country’s biggest builder, has been negotiating with bondholders to stave off a default threat.

Still, signs of stabilisation are beginning to emerge as authorities pledge to support the market. Second-hand home prices fell at the slowest pace in eight months in January.

Policymakers are encouraging the acquisition of existing housing stock to reduce inventories. They are also considering measures including providing new homebuyers with mortgage subsidies, people familiar with the matter said in November.

Shanghai’s latest easing also allows non-residents who have paid three years of tax or social security to purchase a second home in urban areas.

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Investors are awaiting any further measures for the housing market at the National People’s Congress in March. Leaders typically set key economic goals at the annual legislative gathering, including growth and budget targets.

China has doled out incremental supportive measures in recent months. Beijing city further relaxed rules for non-resident homebuyers in December. The central government lowered the value-added tax for selling residential properties owned for less than two years. BLOOMBERG