China imposed the “three red lines” measures, starting in August 2020 to control systemic risk posed by weak developers, sending the industry into a slump not seen since the 2015 stock market crash. Contracted sales at the nation’s top 100 developers slumped 47 per cent in the first quarter from a year earlier, as rising cases of debt defaults kept buyers on the sidelines, according to industry data.

“After Zhengzhou and Harbin issued large-scale loosening measures, we did not see any sign of official resistance, suggesting the central government was not opposed to them,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institute. “So we will see more cities, especially those with dormant home sales, follow in their footsteps.”

More than 60 municipal authorities started easing property restrictions in the first quarter, according to a note on Sunday by the China Index Academy, a real estate research firm. They included lower down payments, cheaper mortgage-financing costs and financial support for cash-starved developers.

06:19

High hopes for China’s Greater Bay Area, but integrating 11 cities will pose challenges

High hopes for China’s Greater Bay Area, but integrating 11 cities will pose challenges

In Fuzhou, new home sales fell 45 per cent from a year earlier to 1,426 units in February. While March saw a slight improvement to 1,664 units, they still represented a one-third decline from the same month in 2021, according to local government data.

A year ago, the city government barred non-locals from buying property without fulfilling a minimum one-year rule of working and living within its jurisdiction, before cracks in the nation’s housing market widened.

The city’s property transaction registration centre confirmed to the Post that the restriction has been lifted. People without hukou are now eligible to register property bought in the city. Details including how many units they can buy are still pending evaluation and announcement, it added.

“I really hope that the relaxation can bring us some home hunters,” said Wang Wei, a property broker in Fuzhou, who only closed two deals in February from his usual five to seven a month. “It may still take some time as people are still unsure whether prices will still drop or rebound.”

08:07

Cheap housing but few economic opportunities for young Chinese in city along Russian border

Cheap housing but few economic opportunities for young Chinese in city along Russian border

Zhengzhou became the first mainland city to ease restrictions for people who work in the city without hukou, allowing them to buy a second home from this month. Harbin last month scrapped a rule that forbade new owners from selling homes within three years of buying.

In Quzhou, the authorities have now allowed non-locals to buy a home in the city, while also removed a five-year holding period for resale.

While top policymakers have been careful with their approach to stimulating the industry, they have acknowledged the crisis by easing borrowing costs and pumping the financial system with more cash. The finance ministry has also decided not to expand a property tax trial in more cities this year, citing poor market conditions.

That could boil down to new challenges as sporadic Covid-19 lockdowns shut key manufacturing and commercial hubs and property showrooms. More developers have joined China Evergrande, Kaisa Group and Modern Land among debt defaulters, the latest being Logan Group and Sunac China.

The sector’s “difficult funding conditions and sizeable refinancing needs for the rest of 2022 will further strain developers’ liquidity and increase the number of defaults”, said Moody’s analyst Daniel Zhou.