The city of Tongling in eastern China’s Anhui province became the fourth community in the country to officially relax government restrictions on home sales over the last ten days, as the Chinese economy grapples with a housing slowdown of increasing severity.
According to a report in the Wall Street Journal, the government of the city of 740,000 people between Wuhu and Anqing in southern Anhui announced on Monday that it will offer a 1% subsidy on the cost of a new home for first time home buyers who buy units smaller than 144 square metres, effectively waiving the city’s deed tax.
As in the case of Wuxi and Nanning, which last week moved to broaden the number of buyers receiving favored status as local home buyers, Tongling will also ease its requirements for securing a hukou – the household registration document which qualifies residents for local government benefits – for non-residents who buy a home.
The Journal story also documented that the fourth-tier city was lowering downpayment requirements for homes purchased using housing provident fund loans from 30 percent to 20 percent. Most major cities in China currently require 40 percent down payments on home loans.
Homes Sales Drop Even in Largest Cities
The new measures by Tongling, Wuxi and Nanning come as China’s once booming housing market enters what appears to be a deepening slump, even in what were until recently the country’s strongest home markets.
According to data from real estate consultancy Centaline, home sales in Beijing dropped 80 percent over this year’s May holiday (May 1st to 3rd), compared to the same period last year – a seven year low. The agency’s figures indicate that only 169 new homes were sold during the first three days of this month, down from as many as 1000 during peak years, and even lower than the previous low of 400 set during the 2008 financial crisis.
In Shanghai, new home sales fell to their lowest level in 11 weeks in the week ending on May 3rd, down 35.9 percent compared to the previous week, according to data from Shanghai Uwin Real Estate Information Services.
The week to week drop in China’s commercial capital was due in part to the three day holiday, however, buyer uncertainty also was seen as a contributing factor in the slowdown.