Hangzhou, home to Alibaba and Geely, turns market-friendly by scrapping more barriers to revive home sales

Name: Boom, bust and borrow: Has China’s housing market tanked?
Uploaded: 2024-03-14T09:02:49.000Z
Duration: 10 min 57 s
Description: Boom, bust and borrow: Has China’s housing market tanked?

The local government scraps rules on second-home purchases, offerst tax exemption on resale of long-held properties

Policy tweaks target secondary home market accurately, given worsening inventory outlook, China Index Academy says

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Workers at a construction site of a housing project along the Beijing-Hangzhou Grand Canal on March 2, 2024. Photo: Getty Images

Yulu Ao

Published: 5:02pm, 14 Mar 2024

The local government in Hangzhou, the capital of eastern Zhejiang province, has taken another drastic move to ease home-purchase restrictions in the city, after an effort last year failed to rejuvenate the housing market.

The city, home to China’s tech leaders including e-commerce platform operator Alibaba Group Holding and carmaker Geely Automobiles, removed curbs on second home ownership with immediate effect, joining other top-tier mainland cities in breaking down barriers and ending a three-year slump nationwide.

It will no longer impose eligibility criteria on buyers making their second home purchases in the city, according to a notice published by the housing bureau on Thursday. In the past, only qualified residents were allowed to buy houses in specific areas, subject to a limit.

Alibaba’s headquarters on the outskirts of Hangzhou in Zhejiang province. Photo: Reuters

The decision reflects ongoing policy tweaks as property developers continue to struggle amid weak demand and consumer confidence. Authorities in Hangzhou last October lifted curbs on home purchases in five areas in the city, while also relaxing rules for unmarried buyers to acquire homes to energise the market.

“This policy targets the second-hand home market accurately,” said Gao Yuansheng, executive vice-president at the Zhejiang branch of China Index Academy. “This segment of the market still faces huge supply pressures.” About 70,000 units will enter the market this year, adding to the existing inventory of 140,000, the academy forecasts.

Hangzhou, a city of 12.5 million people, enjoyed a 5.6 per cent growth in gross domestic product to 2 trillion yuan (US$277 billion) in 2023, according to the statistics bureau. Like other big cities such as Beijing, Shenzhen and Guangzhou, Hangzhou erected some of the toughest barriers to cool price speculation before the current industry slump.

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Boom, bust and borrow: Has China’s housing market tanked?

While the move in October lifted demand, it has failed to sustain it. The city recorded 5,849 deals of new homes and 6,875 of second-hand units in the first two months this year. They were 64 per cent and 21 per cent lower than the same period last year, according to data compiled by Zhuge Real Estate Data Research Centre.