Hohhot leads the way in easing home purchase restrictions

Mainland city relaxes curbs on home purchases as local authorities try to find ways to stimulate market without incurring the wrath of Beijing

PUBLISHED : Saturday, 28 June, 2014, 1:07am
UPDATED : Saturday, 28 June, 2014, 1:07am

Hohhot has dropped the requirement for property buyers to submit their certificates of homeownership, making it the first city to relax home-purchase restrictions on the mainland to help stabilise the struggling real estate market.

However, real estate industry players told the South China Morning Post yesterday they had not received any new guidelines from the housing bureau regarding the latest policy and there had been no change to the way they did business.

"Relaxing home-purchase restrictions in low-tier cities is urgently needed. There will be more cities following suit," said Edison Bian, the research head of China property at UOB Kay Hian in Hong Kong. "No major policy relaxation is expected in the key cities."

In Hohhot, the relaxation of the policy has so far remained only on paper.

"Home-purchase restrictions still exist. A certificate stating how many homes our clients already own is still needed when we help them register the transaction with the housing bureau," said Liu Hui, who is with local property agency Jingcheng Guangsha.

Phone inquiries to the local housing bureau were eventually directed to the general office of the city government, which did not answer the phone.

Hohhot is the capital of Inner Mongolia, known for its coal mines and heavy pollution.

The city's housing inventory of about 120,000 units will take more than 10 years to sell down at the current pace, according to consultancy Centaline (China).

"The housing bureau has not notified us of any change. It will probably take a few weeks for the details to come out," said a salesperson at a new home project in Juhua Century City.

Sales of new homes in 40 big cities on the mainland dropped 23 per cent in the first half of this year from a year ago, according to a survey by CRIC, a unit of real estate services company E-House China.

A few cities have attempted to loosen home-purchase restrictions since the property market cooled last year because of oversupply and tighter credit conditions.

The central government apparently pushed back such a plan by the industrial city of Shenyang to scrap purchase restrictions earlier this month.

To stimulate the housing market without annoying the central government authorities, some cities resorted to unorthodox tactics.

Wuxi, in Jiangsu province, made it easier for migrant workers to obtain local residency through home purchases. Nanning, in Guangxi, started to regard families in neighbouring cities as local residents in April, enabling them to buy homes there.

In Hohhot, the statement was first posted on the local housing bureau's website on June 20 but was later removed because of "printing errors", stoking speculation it might be cancelled. The latest version was reposted on Thursday, correcting second homes to secondary homes.

"It is a positive signal from the government," Liu said. "Home prices may stop falling, but transactions are unlikely to recover much."

Average monthly transactions at his shop had more than halved to about seven from last year, he said.