During China’s decades-long housing boom, demand for apartments was so high that cities restricted who could buy homes and limited how many they could buy.
Now, the country’s largest cities are rolling back those rules as they face a different challenge: stubbornly low home prices.
Guangzhou, a southern Chinese city of 19 million people, removed all restrictions on home buyers on Monday. It was the latest in a series of high-stakes economic stimulus efforts policymakers have announced in the past week.
The changes in Guangzhou are in line with other strategies that two dozen smaller Chinese cities have used in recent months. Officials are trying to reverse a grinding property downturn and broader slowdown in growth that has afflicted every corner of the Chinese economy, from the young graduates looking for jobs to the old being able to retire.
Two other major cities, Shenzhen and Shanghai, also relaxed their rules on Monday, without doing away with all home-buying limits. The news that one of China’s biggest cities was trying something bold was an adrenaline shot for China’s stock market, another casualty of China’s economic woes.
An index of big Chinese companies traded in Shanghai or Shenzhen, the CSI 300, rose 8.5 percent after jumping nearly 16 percent last week. And the main gauge for Chinese property stocks in Hong Kong jumped by nearly 10 percent on Monday alone.
So much money exchanged hands in China’s stock markets that the turnover in shares reached a record high, state media reported. On Chinese social media, people swapped stories about the frenzy in the stock market and asked whether it was time to jump in.
China’s housing boom — the longest in modern history — began to turn in 2020 when the authorities, starting with the top leader, Xi Jinping, decided to abruptly bring property development to heel. Beijing signaled that no company was too big to fail and cut off funding for big firms, triggering a wave of collapses that has shaken the housing market and home buyers.
But after four years of falling home prices, China’s top leaders, who have been criticized by economists for not responding forcefully, last week rolled out one measure after another to try to stimulate demand for homes. The central bank lowered the down payment requirement for mortgages to 15 percent, from 25 percent. It said it would allow home buyers to refinance their mortgages. It also cut mortgage rates.
While home buyers must meet certain criteria to qualify for a mortgage in Guangzhou, limits that prevented unmarried buyers and families without local household registration were eliminated starting on Monday.
“All purchase restrictions on residents’ purchase of housing in the city will be canceled,” the Guangzhou government said in a notice on Sunday, adding that it hoped the move would “promote the stable and healthy development of the real estate market.”
In Shanghai and Shenzhen, local officials said more people could buy apartments in suburban neighborhoods and widened the category of people eligible to buy a home.
“It’s definitely a milestone,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics, of the move in Guangzhou. House prices there are down by more than 15 percent over last year.
“It seems pretty clear that local government and ministerial officials have received the call for greater stimulus and are joining the bandwagon,” he added.
The question now, experts said, is whether the moves are coming too late in the housing crunch to have a far-reaching effect.
While the burst of new policy in the past week is notable, officials have announced similar moves in recent months. But those changes, like lessening restrictions for home buyers, have led to only short bursts of home buying rather than boost lasting confidence in the housing market.
“Removing all restrictions on home purchases may seem like a big move,” said Wang Tao, chief China economist at UBS, the Swiss bank. But, she added, “the impact on the market may be much smaller than it would have been had the removal occurred in early 2023.”
That’s because many Chinese people are still worried about whether the developer they pay today will be around tomorrow. While the government has pulled out the stops to try to get home buyers back into the market, they have done much less to help the companies that build the apartments.
Earlier this year, the government tried to step in as a home buyer of last resort, providing tens of billions of dollars to buy up millions of empty and unwanted apartments. But the scale of the problem is vast: There are over 10 million other apartments not yet completed that were nonetheless sold by developers that went bankrupt or are close to bankruptcy.
“Allowing people to buy homes is not the same as incentivizing them to buy homes,” said Ms. Wang. “In China’s property market it’s a distinction that matters.”
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