Following the examples of Nanjing, Changsha, Suqian, Shenyang, Xiamen and Xi'an, Shanghai and Hangzhou in east China have now implemented measures to lift the gloom over local real estate markets.
On October 14, Shanghai Provident Fund Management Center released a Notice on Raising the Upper Limit of Housing Provident Fund Loans. Accordingly, households consisting of two or more solvent borrowers can use their housing provident funds to borrow up to 600,000 yuan (about US$88,000) instead of 500,000 yuan (about US$73,000), for their first house purchase. Households with a single borrower will not benefit from the change.
The same day, Hangzhou, the capital city of Zhejiang Province, published the government's Opinions about Enhancing the Healthy and Stable Development of Real Estate Market. This move adds several districts to a list of local areas where people are given local permanent residence permits after buying standard-value homes. It also stipulates that buyers of new houses or second-hand houses will be granted tax subsidies.
Meanwhile, the local authorities of Hangzhou eased restrictions on real estate developers by lowering the rate of advance tax, adjusting the term of payment for land transactions, and relaxing restrictions on the duration of construction, among a broad range of measures.
A developer told Shanghai Securities News that the government's move relieves the pressure on capital turnover for real estate companies at a time when borrowing from banks is difficult and expensive.
Zhao Hangsheng, director of Zhejiang University's Institute of Real Estate Investment Studies, said the time is right for government agencies to take action to revitalize the market, but the outcome will remain uncertain as a result of the on-going global financial crisis. And the authorities need to do still more, Mr. Zhao pointed out. He expressed his hope for more effective rescue plans from higher authorities.
According to relevant statistics, there were only 17,303 apartments sold in Hangzhou from January to September this year, down 46 percent compared with the same period last year. The weak market is a cause for concern. Reportedly, government officials held talks with several big local developers before issuing the order.
(China.org.cn by Pang Li, October 16, 2008)