China’s property slump: Beijing ends curbs on multiple home ownership in outer areas of city to stimulate buying

Families that reach current ownership limits will be allowed to purchase one more home in the area outside Beijing’s fifth ring road
Home transactions outside the fifth ring road accounted for around 80 per cent of the total in the city in 2023, according to Centaline

China property

Yulu Ao

Published: 1:17pm, 1 May 2024

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China’s capital Beijing has relaxed some rules on multiple home purchases after 13 years as part of the country’s effort to stimulate a stubbornly stagnant property market.

Families that reach current ownership limits will be allowed to purchase one more home in the area outside Beijing’s fifth ring road, according to a notice issued by the housing authority late Tuesday.

In addition, single adults who hold a Beijing hukou, or permanent residence permit, as well as non-hukou holders who have paid social insurance or income tax for five or more years, will be allowed to buy a second property in the area.

The easing of the rules – originally put in place in 2011 to ease speculative buying – came on the same day that new statistics underscored the property market’s continued slump. New home sales in April by the top 100 Chinese developers drooped 44.9 per cent year on year to 312.2 billion yuan (US$43 billion), and fell by 12.9 per cent compared with March, according to China Real Estate Information Corporation.

A man pulls a cart past residential buildings at a China Evergrande residential complex in Beijing on September 27, 2023. Photo: Reuters

The easing also came on the same day that the Politburo – the ruling Communist Party’s top decision-making body – called for promoting the high-quality development of the housing sector as it announced its long-awaited third plenary session in July.

It also follows moves by Chengdu and Changsha to fully remove housing purchase restrictions city-wide and resumption by Nanjing of its “buy a home and get a hukou” policy after seven years.

One of the most expensive home markets in the country, Beijing has launched a series of easing measures over the past year, such as cutting down-payment ratios and lowering mortgage rates. The city also scrapped a rule banning divorced individuals from buying new homes in the capital within three years of a previous home purchase. The rule had been put in place to prevent people from faking divorces to buy more property.

Home transactions outside the fifth ring road accounted for around 80 per cent of the total in the city in 2023, and the area’s stock of available homes also hovers around the same level, according to data compiled by Centaline Property Agency.

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“To allow residents to purchase one more unit is expected to warm the home market given the transaction performance in the area,” said Chen Wenjing, director of market research at China Index Academy, citing Centaline’s data.

“Still, the process of such easing in Beijing will remain gradual, with those policies that were introduced in an overheated market, which are not in line with the current needs, the first to be adjusted.”

Tier 1 cities’ policy easing has been slow on purpose, in order to unleash home demand gradually and not affect home demand in surrounding cities, Everbright Securities said in a note on Tuesday. “Given the continued weakness of the property market, we think that while the process could be accelerated, it will remain gradual unless policymakers have lost patience,” Everbright said. “However, as China’s Q1 growth beat forecasts, we think it is unnecessary for tier 1 cities to relax restrictions to the same extent [as] Chengdu and Nanjing in the near term.”