China is contemplating lifting some of the most significant remaining constraints on home buyers after previous interventions failed to resuscitate a stagnant housing market, sources familiar with the matter revealed.
Regulators are reportedly formulating a plan that would permit major cities like Shanghai and Beijing to relax restrictions for non-local buyers – individuals lacking a Hukou residence permit for that specific locale. This barrier has already been eliminated by many smaller cities.
Additionally, the government is considering abolishing the differentiation between first and second home purchases, potentially leading to reduced down payments and lower mortgage rates for second residences, as per the sources.
In the face of a prolonged housing downturn entering its fourth year, policymakers are facing mounting pressure to reverse the trend, which has been hampering China’s economy and causing significant job losses. Financial institutions, including UBS Group AG and Bank of America Corp., anticipate China falling short of its approximate 5% growth target for the year.
Authorities are also discussing fresh initiatives to bolster the lackluster stock market, though further details were not disclosed. China’s CSI 300 Index has experienced a decline of about 7% this year, ranking among the poorest performers globally.
The proposed adjustments would necessitate approval from senior leadership and are subject to change, according to the sources. As of now, China’s housing ministry has not provided a response to requests for comments on the matter.
