Shanghai Officials Open Up Homebuying to More Non-Residents

Homebuying in Shanghai is opening up to more potential owners.

City authorities will allow non-resident homebuyers who have paid social security or individual tax for a year to purchase homes in urban areas, Bloomberg reported. Prior to the new legislation, those without local household registration were required to pay social security or individual tax for three years before becoming eligible.

In addition, Shanghai officials will also allow non-residents who have paid three years of income tax or social security to purchase a second home in urban areas. People who have held residential permits for five years but never paid social security or tax will also be allowed to purchase a first home in the city.

Beijing and Shenzhen are expected to follow in Shanghai’s footsteps in loosening purchasing measures. In relaxing requirements, Shanghai will have an increased number of prospective homebuyers. That could lead to home prices stabilizing in the second quarter, according to Bloomberg, citing analysts from Founder Securities Company. The city, and China at large, has seen diminished sale volume and property values in recent years.

New home sales across China fell to their lowest level in more than 15 years at the start of this year. At the same time, gross domestic product is on the rise, with China’s overall trade surplus increasing to nearly $1.2 trillion.

Chinese officials have introduced measures in recent months designed to stimulate home sales. In December, the local government in Beijing similarly relaxed rules for non-resident homebuyers, lowering the amount of time spent paying social security or individual tax for non-residents to purchase property, Bloomberg reported. The same month, China’s central government lowered the value-added tax for those selling residential properties owned for less than two years.

The efforts to juice the housing market appear to be pushing sales in the right direction. In January, second-hand home prices fell at the slowest rate in eight months, according to Bloomberg. Chinese legislators are also purportedly considering acquiring existing housing stock to reduce inventories and providing new homebuyers with mortgage subsidies.

— Chris Malone Méndez