The first two cities in China to repeal home purchase restrictions on a sweeping basis have seen a surge in sales according to data from E-House and local government sources.
Hohhot, which cancelled all home purchase restrictions during the last week in June, has already 1,235 homes between June 13 to July 13th – a 43 percent increase compared to the previous 30 day period, according to data from the government in the capital city of Inner Mongolia.
Jinan, which followed Hohhot’s lead by removing the home purchase restrictions during the second week in July, saw housing transactions jump 188 percent during the first 20 days of this month, compared to the same period in June.
The two cities were the first large cities to lift home purchase restrictions in a broad-based manner, but have since been joined by Haikou and Wenzhou, as China’s local governments struggle to rekindle buyer demand amid slowing housing markets. Many other communities, including Hangzhou just this week, have already relaxed at least some of the marketing cooling measures as they saw home sales turn frigid.
In the case of Wenzhou, the local housing market has seen two and a half years of steadily falling home prices due to the home purchase restrictions and tighter credit.
China’s central government, which began putting the home purchase restrictions in place in 2011 has begun signalling this year that local governments can revise or remove the policies if this appears needed to support housing markets and clear inventories of unsold homes. Government statistics released earlier this month showed home prices falling in 55 of China’s 70 largest cities. The drop in housing sales and average prices comes as developers struggle with a glut of unsold homes following years of a stimulus-fueled housing boom.
At least for now, the governments of China’s first-tier cities have signalled that no changes in the home purchase restrictions are in their plans, as China’s central government continues to emphasise the need for a differentiated approach to managing the housing market. While government policy in the second and third-tier cities appears targetted at propping up flagging markets, in the largest cities, the authorities still seem determined to prevent further housing price inflation.
In addition to the officially announced changes in the rules in cities such as Jinan and Hohhot, many other cities have made informal changes to the home purchase restrictions without making any public changes to the rules.