One eastern Chinese city has found a quick solution for propping up a declining housing market – creating more residents.
According to a report in the Wall Street Journal, Wuxi in Jiangsu province has begun relaxing the requirements for securing a hukou, the all important household registration document in China, for non-residents who buy a home in the city. The move is seen as a way to create more housing demand.
Under the current policy restrictions in most cities, local families who already own one home can purchase an additional unit. Non-local residents are generally restricted to owning only one home. Most cities also apply stricter mortgage policies to non-residents.
The new tactic by Wuxi is a way to overcome the effects of China’s home-buying restrictions without expressly defying or rolling back central government guidelines.
Propping Up a Soft Housing Market
Wuxi city officials may have good cause for concern regarding their housing market, as sales are already off 25 percent compared to last year, according to research data cited in the Journal article.
Although the area of southern Jiangsu province where Wuxi is located is among the most prosperous regions in China, it is also gaining attention for the downturn in local real estate markets.
In February some developers in neighboring Changzhou, only 68 kilometres (42 miles) from Wuxi began discounting homes by as much as 36 percent in an attempt to boost sales. Just two weeks ago a real estate company in Nanjing, 187 kilometres (116 miles) from Wuxi defaulted on a RMB 105.4 million (US$16.9 million) loan.