Home purchasing restrictions outdated

After Hangzhou and Xi’an annulled their restrictions on nonlocal residents buying homes last week, only Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin and Haikou are still carrying out the policy that was introduced about 10 years ago with the aim of checking the bubbling of the housing market then.

To reboot the lackluster real estate market, which concerns many upstream and downstream industries, investment, consumption, national financial security and government revenue, it is projected that these cities will also adjust their restrictive policies in the near future. The national housing inventory for sale now has already exceeded its historical high in 2015.

Therefore the policymakers urgently need to release effective purchasing power, activate housing market transactions, hedge against declining demand, restore market momentum, and stabilize price signals and market expectations.

The first-tier cities should pay attention to meeting the demand for housing purchases by the migrant population and singles. Currently, the average age of marriage and childbirth in large cities is delayed and the proportion of single people is increasing.

However, the final effect of lifting purchase restrictions remains to be seen. The housing prices are still high in light of people’s income, even if home mortgage interest rates fall.

The following factors should also be taken into account: the low birth rate, the aging and shrinking of the population, the reduction in residents’ savings rate, the unemployment situation, the downward pressure on the economy, and that many migrant workers and college graduates have already moved from the big cities to small and mediumsized towns and to their hometowns in rural areas where home purchase restrictions were never imposed.