(Bloomberg) — China’s financial hub of Shanghai eased home-buying rules in the latest attempt by authorities to contain the nation’s prolonged property crisis.
Eligible residents, including those from outside Shanghai, can now buy an unlimited number of homes in the outer suburbs, according to a statement Monday. Non-residents who have paid pensions for three years can now purchase new homes in urban areas, instead of only being allowed to buy existing residences there.
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Shares of Chinese developers rallied earlier Monday on speculation that policymakers will unveil more steps to support the housing market. Stimulus measures unveiled last September have done little to arrest the four-year slump, which has dragged on growth in an economy that’s now facing fresh threats from US tariffs.
“Shanghai’s easing will definitely be an incremental positive,” said Jeff Zhang, a property analyst with Morningstar Inc. “We estimate property sales in the suburban areas make up more than half of the city’s total.”
Additional measures could come as early as September, with authorities preparing to speed up urban renovation projects to bolster the property market, the Securities Daily reported, citing an industry expert.
A Bloomberg Intelligence gauge of Chinese property shares rose as much as 3%, the biggest intraday move in a month. China Vanke Co. jumped as much as 16% — even after it announced a wider first-half loss last Friday. Sunac China Holdings Ltd. climbed as much as 13%.
Premier Li Qiang last week reiterated the need for action to stop the decline in the real estate market at a meeting of the State Council, or China’s cabinet. The central government flagged broad support during the National People’s Congress in March, when it vowed to “fully unleash” demand from buyers who need homes or seek to improve their housing conditions.
Shanghai’s move follows similar easing by the capital city Beijing in early August, which also allowed eligible residents to buy an unlimited number of homes outside the fifth ring roads, widely considered suburban areas.
Cutting Inventory
The easing is a “targeted” move aimed at lowering Shanghai’s home-buying threshold and reducing inventory in suburban areas, which have about 80% of the city’s unsold homes by units, said Song Hongwei, research director at Tospur Real Estate Consulting Co.