Chinese city Wenzhou eases property curbs, allows purchase of 2nd home
Analysts expect Beijing to also loosen curb on sector in hopes of shoring up the economy
Wenzhou has relaxed restrictions on property purchases to allow some people to buy second homes, the first in the country to ease controls, though analysts say other mainland cities are not expected to follow suit.
Wenzhou's policy shift comes as investors increasingly bet that Beijing may soon loosen its near four-year-old property controls to shore up the economy, which is grinding towards its slowest annual growth in 23 years this year.
Under the new rule, first-home buyers in Wenzhou can now buy two houses, reversing a restriction introduced in March 2011 that barred them from buying two properties as part of a nationwide campaign to calm the mainland's frothy real estate prices.
"This is true," an official from the Wenzhou House Management Centre said yesterday, confirming a local media report that the city had eased its property policy.
Wenzhou's property controls were always more stringent than other Chinese cities, where only purchases of third homes were barred. As such, Wenzhou's latest policy easing brings it in line with its peers.
A birthplace for Chinese enterprise, prosperous Wenzhou was previously plagued by fervent property speculation. But its housing market has slowed under the weight of government policy, and the city was alone among 70 mainland cities to see annual price falls in May and June, official data showed.
House prices in Wenzhou have fallen year on year for 22 consecutive months since September 2011, official data showed. The property sector is a rare bright spot in the mainland's slowing economy, ironically so, since it is the one area where the government most desires a cooling.
Despite having leaned against the house market for almost four years by banning purchases of multiple homes and choking off financing to developers, the mainland still faces record home prices.
The failure to keep house prices in check is in part because controls have conflicted with local governments' need to keep the property market buoyant, to allow them to sell land at high prices to raise revenue.
Analysts say Wenzhou's move does not signal an imminent relaxation in property purchase restrictions nationwide, and that it remains to be seen whether the city's policy change would win the support of government leaders in Beijing.
"Wenzhou's previous property curbs were too harsh and its home prices have fallen too steeply," said Jia Yatong, a property analyst at Haitong Securities.
Property accounts for 15 per cent of the world's second-largest economy.