Beijing Relaxes Home Purchase Rules as China's Real Estate Market Declines

Beijing has eased some regulations on multiple home purchases after 13 years as part of China's effort to reinvigorate the sluggish real estate market.

Families can now acquire one more home in the area outside Beijing's fifth ring road, and certain individuals can purchase a second property in the same area. "The process of such relaxation in Beijing is expected to be gradual, as policymakers aim to gradually release home demand without affecting surrounding cities," according to a notice issued by Beijing's municipal housing and urban-rural development commission.

This relaxation of rules, originally put in place in 2011 to curb speculative buying, comes as new home sales by top 100 Chinese developers dropped 44.9% year-on-year in April 2023. "Given China's stronger-than-expected Q1 growth, there is no immediate need for tier 1 cities like Beijing to relax restrictions to the same extent as other cities," the notice added.

Under the new rules, local families with the Beijing hukou (residence permit) can now buy one additional commercial house outside the fifth ring road even if they already own two apartments in the city. Single adults with the Beijing hukou and non-Beijing residents who have paid social insurance or income tax for at least five consecutive years are also allowed to purchase one more property outside the fifth ring road if they already own one apartment.

Beijing's neighbor Tianjin is also optimizing its real estate regulation starting from May 1, 2024. Residents with the hukou of Beijing or Hebei Province and those working in the two regions can now enjoy the same house-purchase policies as those with Tianjin hukou. The limit on residents with Tianjin hukou to buy new commodity housing of over 120 square meters has been removed, and the number of houses owned by home buyers will be calculated on a district basis to meet the demand for cross-district home acquisition. Districts in Tianjin are also encouraged to provide home-purchase subsidies and corporate group purchase discounts to relieve residents' home-buying burden.

Why this matters: The relaxation of home purchase restrictions in Beijing and Tianjin highlights the Chinese government's efforts to stimulate the struggling property market, which has been a key driver of economic growth. The move could potentially boost home sales and provide some relief to cash-strapped developers grappling with a prolonged downturn.

The easing of home purchase rules in Beijing and Tianjin is part of a broader effort by the Chinese government to support the economy through prudent monetary and proactive fiscal policies. The Politburo, the top decision-making body of the Communist Party, recently stated that the sustained recovery and improvement of the economy still face many challenges, such as insufficient demand and pressures on firms. However, they also noted that China's economic foundation is stable, with many advantages, strong resilience, and great potential.

Key Takeaways

• Beijing has eased rules on multiple home purchases to boost the sluggish real estate market.
• New home sales by the top 100 Chinese developers dropped 44.9% in April 2023.
• Beijing residents can now buy one more home outside the 5th ring road.
• Tianjin optimizes real estate regulations, allowing more flexibility for home buyers.
• Relaxation of rules aims to stimulate the struggling property market and support economic growth.