Shanghai eased home purchase restrictions to allow a broader pool of buyers to purchase a second property in China’s financial center, Shanghai Securities News reported today.
The city loosened its definition of locals to let residence permit holders who have lived in the city for at least three years to buy a second home, the official newspaper affiliated with state-run Xinhua news agency said, citing an unidentified official of the city’s housing regulator. It previously limited the second-home option to locals, or those born in the city or who worked for an extended period of time and were officially recognized as locals, without specifying guidelines for non-locals.
“This is certainly a measure of easing,” said Jack Gong, a Hong Kong-based analyst at Jefferies Group Inc. “But the easing by the local government doesn’t mean the central government will loosen its property controls.”
Officials from Shanghai and Beijing said earlier this year they plan to keep their home purchase restrictions in 2012. China won’t waver on its real estate controls and efforts to bring prices down to a reasonable level to ensure fairness and stability, Premier Wen Jiabao said on Feb. 12.
The latest easing may boost the city’s home sales by 20 percent to 30 percent, according to Jefferies.
The gauge tracking property stocks on the Shanghai Composite Index surged 2.5 percent, set for the highest since Nov. 4 and the biggest gain among five industry groups on the benchmark. Poly Real Estate Group Co., the nation’s second-biggest developer, climbed 2.6 percent to 11.27 yuan as of 10:06 a.m., set for the highest since Aug. 26.
The report came a week after the eastern Chinese city of Wuhu reversed a decision to relax property curbs. The mid-sized city in Anhui province had planned to waive a deed tax and subsidize some purchases on Feb. 9, becoming the first Chinese city this year to signal its intention to ease property measures.
It is not clear if the Shanghai easing will hold because the restriction on home purchases “is the most critical” tightening policy for the central government, Johnson Hu, a Hong Kong-based analyst at CIMB-GK Securities Research, said in a note to clients today.
About 671,000 residents in the city of 20 million were issued residence permits as of March 2009, China Business News reported today, citing the local statistics bureau. Residents with at least a year of tax records in the city are allowed to buy one home.
China’s January new home prices recorded their worst performance in at least a year, with none of the 70 cities monitored by the government posting gains. Shanghai’s housing values fell 0.1 percent in January from December, the fourth month of declines, the statistics bureau said Feb. 18.