Boosting Stability in the Real Estate Market

On November 26, the Guangzhou Housing Provident Fund Management Center issued a notice regarding the adjustment of housing provident fund policies, which includes an increase in the maximum loan amount and adjustments to the minimum down payment ratio and limits on rental withdrawals. Prior to this, the four first-tier cities—Beijing, Shanghai, Guangzhou, and Shenzhen—announced the cancellation of standard classifications between ordinary and non-ordinary housing starting December 1, as well as enhancements to tax incentives for housing transactions.

Industry insiders suggest that this series of favorable policies, from optimizing purchase restrictions to lowering loan interest rates and down payment ratios, and eliminating distinctions between types of housing, sends a continued signal of "stabilizing the property market." This is expected to lower the barriers to homeownership, enhance buyers’ willingness and capability to purchase homes, invigorate the real estate market, and promote its healthy development.

There is still room for optimizing and adjusting real estate policies.

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The Guangzhou Housing Provident Fund Management Center stated that further support for the housing needs of the public is vital in helping establish a new model for real estate development that accommodates both rental and purchase options. This move aims to respond to societal concerns and facilitate the stable and healthy development of Guangzhou's real estate market, offering a series of favorable housing provident fund policies that better meet the housing needs of contributors.

Specifically, the highest loan amount for housing provident funds will be increased, with the maximum loan limits rising from 700,000 yuan and 1.2 million yuan for "one-person" and "two or more persons," respectively, to 800,000 yuan and 1.6 million yuan. Furthermore, support for families with two or more children will be considerably enhanced, allowing an increase of up to 40% in the maximum loan amount for the purchase of their first and second homes.

It is worth mentioning that this is the second adjustment to the maximum provident fund loan amount in Guangzhou this year, following an increase in April.

In conjunction with the increase in loan limits, the minimum down payment ratio for the second home loan will be reduced from 30% and 40% to 20%, aligning with the first home purchase requirements. The minimum down payment ratio for housing loans applied for affordable housing will be set at 15%.

Industry insiders indicate that the implementation of Guangzhou's new provident fund policies will further bolster the protective role of the housing provident fund, effectively reduce the financial burden on contributors when purchasing homes, save on interest expenses, and alleviate the pressure of acquiring funds for purchase. Additionally, increased support for contributors, particularly new urban residents, young people, and families with multiple children, will ensure that more citizens can secure suitable living arrangements, allowing more contributors to benefit from the policy's outcomes.

In fact, aside from Guangzhou, Harbin has also recently adjusted its provident fund policies, including shortening the required contribution period for applying for provident fund loans and increasing the multipliers for determining account balances.

According to Yan Yujin, vice president of the Shanghai Yiju Real Estate Research Institute, the adjustments to provident fund policies further underscore the sustained efforts across various regions to reduce housing transaction costs. This will help further secure housing needs at the level of the provident fund and continuously stimulate the release of various types of housing demand. At the same time, it reflects that there is still room for optimization of policies, and localities should adhere to the principle of "utilizing all available resources" to continually support a vibrant purchasing market.

Accelerated implementation of a "combination of policies" signals a shift in expectations.

In addition to adjustments to provident fund policies, more favorable real estate policies are being rolled out. On November 22, with Guangzhou joining in, all four first-tier cities have announced the cancellation of ordinary and non-ordinary housing standards starting December 1, with corresponding adjustments to related taxes and fees. This adjustment is expected to lower the costs of homeownership for buyers and relieve financial pressures on businesses, thereby stabilizing market expectations.

Specifically, prior to the new tax policy, cities outside the first-tier categories had different deed tax rates for newly purchased homes over 90 square meters, set at 1.5% for the first home and 2% for the second. Following this tax reform, purchasing housing under 140 square meters will allow for a reduced deed tax uniformly set at 1%. For the second home, the related tax incentives will be even more significant. Previously, second homes in the four first-tier cities were taxed at 3%, but this has now been uniformly adjusted to 1% for homes up to 140 square meters and 2% for those above.

With the intensive introduction and steady implementation of a series of policies, the expectations for the real estate market have quietly shifted.

Take Shenzhen as an example; since the launch of new real estate policies on September 29, transactions in the Shenzhen housing market have continued to rise, showing a trend of increasing volume with stable prices. On the morning of November 24, the Longgang District's Shentie Yueyunjing project sold out in less than two hours after opening, marking the first project in Longgang to achieve "sell-out on launch" in recent years. Moreover, just two days prior, the Nanshan District's Sihai Mingdi project also recorded a remarkable absorption rate of 96% post-opening, contributing to sales amounting to 2.29 billion yuan.

In Guangzhou, Song Jiaping, deputy director of the Real Estate Management Department of the Guangzhou Housing and Urban-Rural Development Bureau, noted that since November, the transaction volume in the Guangzhou real estate market has maintained a high level, further consolidating the stabilizing trend. From November 1 to 18, the area of newly signed contracts for first-hand homes reached 744,300 square meters, marking a month-on-month increase of 25.6%; the average daily contract signing for first-hand housing was 41,400 square meters, the highest monthly average in the past 20 months.

In addition to the first-tier cities, the warming of the market has also extended to second-tier cities. According to the latest report from the China Index Academy, the transaction volumes from November 18 to 24 rose both month-on-month and year-on-year, with a month-on-month increase of 11.75% and a year-on-year rise of 6.26%. Among the various types of cities, second-tier cities experienced the largest month-on-month increase, with Wuhan leading the way and recording a 76.17% rise.

Signs of stabilization continue to emerge.

Increased market activity highlights the precision and efficiency of policy regulation. According to previous data from the Ministry of Housing and Urban-Rural Development, sales data from October revealed a significant transformation in the national real estate market, marked by three notable trends: the total transaction volume of newly constructed commercial housing finally regained growth after 15 months of decline; the transaction volume of second-hand housing saw its first increase after 8 consecutive months of decrease; and the "Silver October" outperformed "Golden September" for the first time in nearly 17 years.

Data from the National Bureau of Statistics corroborated these findings, showing that in October, the sales prices of newly constructed residential homes changed from a month-on-month decline of 1.0% to a rise of 0.1%—the first positive change in nearly 18 months; while second-hand residential prices shifted from a month-on-month decline of 1.3% to an increase of 0.7%, marking the first uptick in nearly 13 months.

Industry insiders note that the data indicates a clear dividing line in the property market cycle between "Golden September" and "Silver October." Specifically, September marked the bottom of the previous downturn, while October signifies a new starting point for the current recovery. At the same time, market policy experts caution that during this new round of stabilization, it is crucial to focus on either "digesting existing inventory" or "coordinating an increase in stock." It’s important to use related financial support effectively and promote a continued rebalancing of supply and demand while ensuring a steady recovery.

"The national real estate market is entering a favorable phase of stabilization, which fully demonstrates the precision and effectiveness of the current series of policies," stated Yan Yujin. Increasing signs indicate that the current policy adjustments are effective. With the ongoing release of policy dividends, there is every reason to believe that the real estate market will embark on a path of more stable and healthy development.