China Property: Hangzhou's Policy Shift Signals Market Stabilisation Efforts

Current Developments in China Property Market

Hangzhou, the capital of eastern Zhejiang province, has scrapped price caps for new housing projects, indicating bolder steps are being rolled out by big mainland Chinese cities to stabilise the market.

The local government, home to Chinese tech leaders Alibaba Group Holding and carmaker Geely Auto, removed price restrictions for homes built on newly acquired land in the city, according to a notice from Hangzhou's housing bureau late on Wednesday.

• The city also lowered the down payment requirement to 15 per cent from 20 per cent for first-time homebuyers.
• Second-home buyers now see down payment requirements lowered to 15 per cent from 30 per cent.

Expert Insights on Housing Prices

“It is expected that housing prices in Hangzhou will stop dropping further,” said Yan Yuejin, vice-president of Shanghai-based E-House China Real Estate Research Institute.

Following the new policies and a rebound in housing transactions during the 'golden week' holiday, experts predict increased activity among builders eager to acquire land in Hangzhou.

The Broader Context of China’s Property Market

Price restrictions imposed nationwide in 2016 to contain wild home prices had hampered recovery efforts in China’s second-largest economy, affecting market dynamics significantly.

Local governments are set to offer bolder measures according to recent central government signals aimed at stabilising housing prices as authorities also look to stimulate consumer confidence.

Chengdu’s Response to Market Challenges

Meanwhile, Chengdu, the capital of southwestern Sichuan province, is seeking public input on proposals to allow homebuyers to obtain their hukou, or official residency, in the city.

This initiative is critical as Chengdu's population exceeded 21 million, while only 16 million people held a hukou.

Conclusion

The recent developments in China’s property market, primarily in cities like Hangzhou and Chengdu, reiterate the ongoing efforts by local governments to stabilise the housing sector amidst broader economic challenges.