Chinese Cities Introduce ‘Relaxed’ Policies to Stabilize Stagnating Real Estate Market
As the COVID-19 outbreak left many Chinese families struggling to pay their rents and mortgages, several cities including Shanghai, Xi’an, Wuxi, Nanchang and Nanjing introduced a number of “relaxed” home purchase policies to alleviate people’s burden and reanimate the stagnating real estate market.
According to the Economic Daily, the coronavirus epidemic resulted in many cities reporting “zero transactions” in the new and second-hand housing sectors in February, with a growing number of bankruptcies among real estate companies.
The National Bureau of Statistics released a report on the national real estate investment and sales situation from January to February, showing that the investment in the real estate sector was 1.011 trillion yuan, a year-on-year decrease of 16.3%. The floor space of commercial buildings sold stood at 84.75 million square meters, a year-on-year decrease of 39.9%, while the sales of commercial buildings amounted to 820.3 billion yuan, a decrease of 35.9%. Analysts point out that due to the epidemic, in February 2020, the sales offices of real estate companies in most cities in the country were closed, resulting in plummeting sales.
Wuhan, Changchun, Shenzhen, Hangzhou, Nanjing, Zhengzhou, Jinan, Suzhou and other places have introduced measures to deal with the negative impact of the epidemic and help real estate companies stabilize local property markets.
Shanghai, Xi’an, Wuxi, Nanchang, Nanjing and other cities introduced new land policies spanning installment payments for land transfers, allowing changes in the payment period, postponing the validity period of land evaluation and more.
In Shenzhen, Zhengzhou, Wuhan, and Changchun local governments are helping real estate companies overcome hurdles by unfreezing pre-sale funds, relaxing pre-sale supervision, and lowering pre-sale standards.
As of March 23, the housing management department in the city of Zhengzhou had assisted a total of 463 enterprises and helped housing companies with over 560 million yuan in loans. Wuhan also eased its grip on housing enterprises by relaxing pre-sale supervision, while Changchun lowered pre-sale standards to simplify pre-sale conditions for real estate companies.
In places like Guilin, Qinzhou, Dongxing and Yulin, local governments are granting home buyers subsidies to promote “the stable and healthy development of the property market.”
However, the official voice of the Central Committee of the Communist Party of China, the People’s Daily, noted, “Although the sudden coronavirus epidemic has significantly hampered China ’s economic growth, the ‘hot’ real estate market is not among viable policy options available to the government to promote economic recovery. This means that the regulation and control of the real estate market in various parts of China will continue to adhere to the general principle ‘houses are for living, not for speculation.’ Attracting hot money into the real estate market and pushing up housing prices to drive up economic indicators is not a possible solution.”
On the other hand, according to Tencent News, Xie Yifeng, president of the China Urban Real Estate Research Institute, believes that more cities will introduce policies to stabilize their property markets in the near future. The measures could include subsidies for housing purchases, relaxation of pre-sale conditions, delays in payments of land transfer fees, and a relaxation of regulations on purchases, loans, and credit financing.
Several real estate industry insiders told the 21st Century Business Herald that they were confident in the recovery of China’s property market after the epidemic is over. Data from real-estate brokerage firm Lianjia shows that the accumulated market demand is currently quite strong. In the past two weeks, the volume of second-hand transactions in 18 key cities increased by 89.7% (first week) and 64% (second week) from the previous month.