One of China’s richest cities said Thursday it would lift all restrictions on home purchases, joining a growing list of urban areas rolling back restrictions to shore up a flagging real estate market.
Many Chinese cities introduced restrictions and strict credit requirements for home purchases more than a decade ago to curb rising prices and rampant speculation.
But now they are reversing that policy to stem an economic downturn marked by a developer debt crisis, low demand and falling prices.
The eastern city of Hangzhou – home to 12.5 million people – said on Thursday it had lifted all purchase restrictions “to promote the stable and healthy development of the market”.
“As of the date of issuance… the purchasing qualifications of those purchasing accommodation within the boundaries of this city will no longer be verified,” it said.
Hangzhou, a major innovation hub home to tech giants like Alibaba, is one of the most desirable and expensive places to buy property in China.
The announcement quickly racked up more than 150 million views on social media site Weibo, where many users doubted the policy would make any difference.
“Given the property prices in Hangzhou, what is the point of lifting the purchase restrictions? I still can’t afford it,” one commenter wrote.
Bill Bishop, editor of the influential Sinocism newsletter, called the move “a sign of desperation.”
“If this does not lead to an increase in sales, there will be even more problems as prices will have to be adjusted downwards sharply,” he wrote on social media site X.
More than 20 cities have removed restrictions on home purchases since the start of last year, according to an AFP tally.
Chengdu in southwest China announced last month that it would no longer check potential buyers’ household registration documents, social security and other conditions before giving the green light to purchase.
Several of the largest cities, including Beijing, Shanghai and Shenzhen, have partially lifted curbs but resisted eliminating them entirely.
Real estate and construction account for more than a quarter of China’s gross domestic product, but the sector has been under unprecedented strain since 2020.
This year authorities tightened developers’ access to credit to reduce rising debt.
Since then, major companies such as Evergrande and Country Garden have faced bankruptcy, while falling prices have discouraged consumers from investing in real estate.
The measures taken by the central government to support the sector have so far had little effect.
And President Xi Jinping has largely remained true to his oft-touted maxim that “houses are for living, not speculation.”
Last month, the International Monetary Fund said China’s economic recovery from the pandemic could stall if the crisis was not adequately addressed.
“Without a comprehensive response to the troubled real estate sector, growth could stall and harm trading partners,” the company warned in its World Economic Outlook report.
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