Shanghai, China, has eased the conditions for purchasing real estate in the city as part of the efforts of local authorities throughout China to put an end to the real estate sector crisis that is burdening the economy.
Many cities imposed strict restrictions and credit conditions on home purchases more than a decade ago with the aim of reducing high prices and stopping rampant speculation.
But it is now reversing the course of those policies in an attempt to stop an economic recession characterized by a debt crisis among real estate developers, declining demand, and falling prices.
New procedures
The new measures include further easing restrictions on home purchases for non-Shanghai residents and divorcing couples, allowing families with two or more children to purchase an additional home, and raising the lending ceiling for mortgages linked to the Housing Savings Fund, a long-term housing savings plan that includes mandatory monthly deposits. From both employers and employees.
The city of Shanghai – the major economic power in China and the largest and richest Chinese city – announced yesterday, Monday, that it will reduce the number of years that people are required to have resided in the city before they can buy real estate.
Those wishing to buy now must have resided in the city for only 3 years instead of 5.
The city also confirmed that it will reduce the minimum down payment for commercial residential mortgages to 20% for the purchase of a first home and 35% for the purchase of a second home, and allow families with two or more children to purchase an additional home.
Saving the real estate sector
The announcement follows similar measures in major Chinese cities such as Hangzhou and Xi’an this month, easing restrictions on first-time buyers.
In recent weeks, the central government has taken measures to save the real estate and construction sector, which has long represented a quarter of GDP.
This month, Beijing reduced the minimum down payment required from first-time homebuyers to its lowest level ever, and offered to have the government buy some unused commercial properties.
The authorities did not provide additional details about the number of homes that the government could buy.
Home sales in China declined by about 47% in the first four months of this year, and the number of unsold homes reached their highest levels in 8 years, which exacerbated the collapse that threatens to expose about 5 million people to the risk of unemployment or reduced income.
