China’s economy is currently facing multiple challenges such as a real estate crisis, overcapacity, and weak consumption. Recently, top Chinese officials have relaxed property purchase restrictions in both Beijing and Tianjin, indicating the oversupply in the Chinese real estate market. Experts and industry insiders believe that the government is running out of effective measures to prevent the housing market from further decline.
The Chinese economy is currently in a prolonged downturn, with the real estate sector, which once accounted for a quarter of the national GDP, burdened with heavy debts, becoming a major obstacle to household consumption confidence.
On April 30, the Chinese Communist Party’s Politburo held a meeting discussing the need for new measures to address the long-standing real estate crisis. They emphasized the importance of formulating policies to manage existing housing inventory and optimize the supply of new residential properties to construct a new development model for the real estate sector.
Following the meeting, Beijing made adjustments to its housing purchase restrictions for the first time since 2011. Under the new policy, residents who already own properties up to the purchase limit are now allowed to buy new homes outside the fifth ring road.
Similarly, Tianjin authorities issued a notice stating that Beijing and Hebei residents, as well as employees working in Beijing and Hebei who purchase property in Tianjin, can benefit from Tianjin’s housing policies. Tianjin also clarified that local residents in the six districts are no longer required to verify their eligibility when buying new residential properties of 120 square meters or more.
Based on comments from Li Yujia, chief researcher at the Guangdong Housing Policy Research Center, Tianjin’s relaxation of purchasing properties above 120 square meters is aimed at stimulating demand in the large-sized new housing market, especially targeting the excessive inventory and inadequate purchasing power.
The decision by both Beijing and Tianjin to ease property purchase restrictions has sparked discussions among industry players and the public. It is seen as a move intended to revitalize the stagnant property market.
Renowned real estate commentator “Guangyu,” with a following of 380,000, noted that the coordination between Beijing and the central government in introducing new policies to optimize existing measures does not signify a complete abandonment of purchase restrictions but rather an indication that full deregulation is not yet imminent.
He emphasized that merely lifting purchase restrictions is insufficient to meet the desired demand, and further policies such as facilitating loans with lower interest rates need to be introduced to stimulate the market.
Data released by the China Index Research Institute showed a cumulative 1.48% decrease in the prices of second-hand homes in the first quarter of this year across 100 Chinese cities. Factors like “price-for-volume” strategies continue to influence the downward trend in second-hand home prices, reflecting a general decline in residential property values.
Xu Hongsen, a popular mainland internet writer with 200,000 followers, and a native of Tianjin, has been exposing irregularities in the Tianjin real estate market through his videos. According to him, the significant price drop indicates the real estate market is heading towards a dead-end, with a complete collapse in progress.
Xu Hongsen mentioned that he has traveled to over 300 cities nationwide and plans to visit cities in the northwest region soon, noting the widespread decline in the real estate sector across the country. Economists have also forecast a rapid decline in the real estate market, indicating a natural downturn driven by oversupply and weakened demand.
Financial influencer “Zhaolishuoshì” highlighted that over the past year, China’s real estate sector has entered a “ice age,” with prices falling in nearly all cities. With the properties becoming increasingly difficult to sell, many cities, especially Beijing, have begun to relax restrictions on property purchases. Although not completely lifted this time, the policy adjustments have created a significant loophole, particularly in Beijing, as a benchmark city.
Considering the rapid fluctuations in property prices following past policy adjustments, there is a concern that the current easing of restrictions might lead to another phase of soaring property prices, making homeownership unattainable for many ordinary citizens.
The lessons learned from the recent sharp decline in property prices over the past couple of years have helped more Chinese individuals understand that the previous twenty years of rapid housing appreciation were abnormal. The cautionary message is clear: property should not be treated as a speculative asset in the future, as recklessness could result in severe financial losses, even if purchase restrictions are lifted in cities like Beijing.
Many netizens expressed concerns about the fact that property prices remain unaffordable, with comments highlighting the disparity between those who own multiple properties and those struggling to purchase even one under the revised regulations.
The ongoing discourse on social media platforms reflects the uncertainty surrounding the effectiveness of the policy adjustments and the underlying challenges facing the Chinese real estate market in its current downturn.