More cities may follow suit as govt considers market-based approach
Hohhot, the capital of the Inner Mongolia autonomous region, has ended all restrictions on home purchases, the first city in China to take such a sweeping step.
There will be no further limits on how many homes each resident may own, and those who don't have official residence (hukou) in the city may also buy apartments, according to a statement posted on the local housing authority's website. Those currently seeking homes are also covered by the policy change, the statement said.
Since 2011, more than 40 cities have imposed restrictions on home ownership by limiting the number of units each household may own and/or by banning purchases by non-local residents. Other cities have relaxed their restrictions, but none have totally eliminated them.
As the central government aims to take a more market-based approach to the property sector, most cities will end home purchase restrictions sooner or later, according to Liu Chunyan, general manager of World Union Property Consulting Co (North China).
Jiang Weixin, former minister of housing and urban-rural development, said earlier this year that the ministry will emphasize "differentiated control". When striving to increase the residential land supply in cities that are facing great upward price pressure - a reference to first-tier cities such as Beijing and Shanghai - it will also give local governments a bigger role in their real estate policies, based on local conditions.
"We believe more cities will follow suit as land income remains the biggest source of finance for local governments. And that isn't likely to change in the short term," said Liu.
"This round of market correction is mainly triggered by credit tightening. If mortgage and credit policies remain the same, the market can hardly make a strong recovery," said Grant Ji, senior director of the investment department at Savills Plc in Beijing.
Cities that have eased or ended restrictions are those where housing supply has substantially exceeded demand.
Hohhot's housing stock is close to 120,000 units, while monthly transactions are running at about 1,000, according to data from Centaline Group.