China’s technology hub of Shenzhen has joined other major cities in easing homebuying rules as authorities try to revive the beleaguered real estate market.
The southern city bordering Hong Kong loosened personal income tax and social-insurance payment requirements for buyers in some districts, Xinhua Finance reported, citing a government statement. It will also allow local families with two or more children to purchase another home in some non-core districts.
The relaxation is the latest attempt to boost demand after Shenzhen in February lowered the homebuying threshold. People can now purchase homes immediately after they get resident permits known as “hukou,” rather than paying taxes for three years first.
“A big wave of local homebuying easing measures may come in May,” said Yan Yuejin, research director at E-house China Research and Development Institute. “While Shenzhen’s easing is for some areas only and not for the whole city, its magnitude is heavy.”
Shenzhen’s relaxation follows a vow from the ruling Communist Party last week to study measures to tackle the nation’s excess housing inventory, as property remains one of the biggest drags on economic growth. After that, capital city Beijing immediately moved to allow families to buy one more home in peripheral areas.
China’s home prices plunged in March at an even faster pace than the previous month, extending a three-year decline. Home sales at major developers dropped about 45% in April.
Read more: Fresh Wave of China Property Stimulus Might Not Lift Home Sales
Former real estate giant China Evergrande Group has received a liquidation order and Country Garden Holdings Co. is at risk of one. Cash-flow troubles are emerging among more developers — including state-backed giants such as China Vanke Co.
Shenzhen is home to companies including Huawei Technologies Co. and Tencent Holdings Ltd. Housing sales in the city in the first two months of the year were about a third less than the peak for the same period of 2021, Bloomberg Intelligence wrote in a recent note.
The nation’s housing minister said in early March that China still faces a “severe task” to stabilize the home market. Weeks later, Premier Li Qiang called for “systematic planning of relevant supportive policies” for property to stimulate demand.
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