Exclusive: Shanghai and Shenzhen to Lift Key Home Purchase Curbs to Boost Market, Sources Say

Top cities in China, including Shanghai and Shenzhen, are planning to lift existing restrictions on home purchases to attract buyers and support their struggling real estate markets, according to multiple sources familiar with the situation.

The proposed changes would eliminate the need for potential buyers to undergo eligibility vetting, and individuals from other regions of China would be permitted to purchase homes in these cities, which had previously imposed strict controls to prevent excessive speculation.

Shanghai, a key commercial and financial hub, and Shenzhen, known as China’s technology powerhouse, are also aiming to remove limits on the number of homes individuals can buy, as reported by three sources.

These adjustments are anticipated to be announced in the coming weeks, as part of broader efforts by various Chinese cities to ease purchase restrictions over the past year, in an attempt to revive demand in the beleaguered real estate sector.

Sources spoke on the condition of anonymity as they were not authorized to discuss the matter publicly. There was no immediate comment from China’s State Council Information Office or the Ministry of Housing.

Shanghai and Shenzhen first introduced limits on home purchases in 2011 and 2010, respectively, to cool surging property prices. The planned easing follows a recent commitment by Chinese leaders to achieve a 2024 economic growth target of about 5% and to halt the decline in the housing market.

If implemented, these measures would represent the latest initiative by Chinese policymakers to address the ongoing downturn in the real estate sector, which has significantly impacted the country’s overall economic growth. These steps follow broader stimulus efforts announced by the central bank aimed at restoring economic confidence.

The CSI 300 Real Estate Index saw a gain of 7.8% in the morning session following the news of these potential changes.

In addition, Beijing is also considering a phased lifting of similar restrictions throughout much of the city, excluding certain key districts which are home to important government buildings.

China’s property sector has been mired in a debt crisis since mid-2021, leading many developers to default on loans and halt construction projects. This situation has strained the financial system and dampened consumer confidence and spending.

Since 2022, the government has been actively working to stabilize the troubled real estate market; however, many previous measures have had limited success or were only temporary fixes.

According to official data, new home prices in China fell at their fastest rate in over nine years in August, highlighting the ineffectiveness of earlier strategies to support the market.

Historically, major cities like Beijing, Shanghai, and Shenzhen have imposed regulations preventing non-local buyers from purchasing homes to manage local housing prices. These rules generally require out-of-town buyers to prove their social insurance and income tax contributions for several years.

Since May, Shanghai has eased its restrictions for non-residents by reducing the required duration of social insurance and income tax payments. Additionally, it has eliminated restrictions for divorced couples looking to buy homes.

Beijing and Shenzhen have also relaxed some home purchase regulations, allowing certain buyers to exchange an old property for a new one.

Earlier in the year, several cities, including Hangzhou, Jinan, and Qingdao, lifted all restrictions on home purchases. Guangzhou also became the first major city to completely relax purchase limits on larger properties earlier this year.