China's Hubei city eases purchase restrictions
A watershed move likely to be followed by more cities to encourage residential property consumption, industry experts said on Tuesday that the capital of Hubei province in Central China has loosened purchase restrictions on the housing market by allowing families to buy an extra apartment in the city.
On Monday, Wuhan issued a package of measures to stabilize its economy, including giving families permission to buy an additional flat in the city.
Local households can have up to three residential apartments under the new regulation, while non-local families can have two.
Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center, said the relaxation on home purchases is in line with the central government's guidance to take measures in accordance with the specific conditions of individual cities.
Li said that Wuhan used to rank within the top three of second-tier cities in land supply and home transactions, but the city's new home transactions fell 40.3 percent in 2022, and its home price index has fallen for 16 consecutive months.
According to Li, 80 percent of the non-locals of the province of Hubei are living and working in Wuhan, and will be an important force in stabilizing the local housing market after the relaxation.
Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution, said the policy was a benchmark practice for fine-tuning home purchases after the central bank allowed cities to decide whether to retain, reduce or remove local lower limits on first-home loans in phases, as long as new home prices fell month-on-month and year-on-year.
The policy of Wuhan has provided a new direction for other cities that want to support self-use housing demand and boost housing consumption, Yan said.
On the same day, the Securities Times reported that Harbin, the capital of Heilongjiang province, issued a 20- item guideline to stabilize its housing market.
The proposed measures include supporting reasonable home purchase requirements and providing financial support like home-buying subsidies to buyers.
There are many provinces and cities that have included home consumption considerations in their economic development plans for 2023, showing the importance of the property sector in regional economic development.
In fact, all second-tier cities with GDPs in the Top 10 eased their home purchase restrictions last year. Some cities went further, like Guangdong province's Foshan and Dongguan, which scrapped their home purchase limits, according to calculations by China Times.
As Wuhan did, it is expected that more hot spot second-tier cities will roll out similar policies, and only first-tier cities may maintain home purchase restrictions, said Guan Rongxue, senior analyst at the Zhuge Real Estate Data Research Center.
Song Ding, a researcher with the China Development Institute, said that the purchase restrictions were a result of the insufficient supply, because the demand surplus will drive up home prices.
As the fundamentals of the property sector have changed, measures used to prevent outrageous speculation and excessive home price growth should be changed as well. It's only a matter of time before more cities end restrictions on the housing market, according to Song.