In the context of a general downturn in the national real estate market, Chengdu, which once emerged from “alternative” and “independent” markets, has also begun to converge with the national market since the beginning of this year. Chengdu has decided to cancel the long-standing real estate purchase restriction policy.
On April 28th, the Office of the Leading Group for the Stable and Healthy Development of the Chengdu Real Estate Market issued a notice on further optimizing policies and measures for the stable and healthy development of the real estate market (hereinafter referred to as the “Notice”), which stipulates that housing transactions throughout the city will no longer be subject to the review of purchasing qualifications.
The housing purchase restriction policy in Chengdu began in October 2016, during which it underwent multiple adjustments and gradually relaxed. On September 26th last year, Chengdu issued a new policy, which stipulated that except for the “5+2” areas (namely the Tianfu New Area Direct Management Zone in Sichuan, the Southern Park of Chengdu High tech Zone, Jinjiang District, Qingyang District, Jinniu District, Wuhou District, and Chenghua District), housing purchase restrictions will continue to be implemented, and other areas will no longer be eligible for housing purchase. At the same time, purchasing properties of 144 square meters or more in restricted purchase areas will no longer be eligible for purchase.
The implementation of this new policy completely abolished the housing purchase restriction policy.
The policy question and answer issued by Chengdu Housing and Urban Rural Development Bureau clearly stated that “the purchase conditions such as registered residence registration and social security will not be reviewed for housing transactions throughout the city, and there will be no restrictions on the number of units purchased.” This means that the purchase restriction policy implemented for more than seven years has been completely lifted.
The policy interpretation released by Sichuan Company of Zhongzhi Research Institute believes that the comprehensive lifting of purchase restrictions is conducive to the active release of effective real estate demand in Chengdu that is “qualified, capable, and willing”. On the one hand, it directly injects new customer groups into the “5+2” region’s new housing market, and on the other hand, it attracts new demand to accelerate the digestion of second-hand housing. By promoting the sales of old to buy new chains, local improvement oriented demand is more actively released, which has a positive effect on stabilizing the scale and prices of Chengdu’s new and second-hand housing markets.
Last year, the transaction volume and price increase of Chengdu’s real estate market ranked among the top in the country. Despite the general downturn of the national real estate market, it emerged as an independent market trend, especially in March and April last year, the transaction volume of Chengdu’s real estate market set a record for many years. However, since the beginning of this year, the increase in the quantity and price of the Chengdu real estate market has slowed down, and the quality of the “little spring” is insufficient. Recently, there has been a wave of price reductions in the second-hand housing market.
In March, a total of 27698 housing units were sold in Chengdu. Among them, 8925 new commercial housing units were sold, an increase of 67.6% compared to the previous period; 18773 second-hand houses were sold, with a month on month increase of 101.4%. However, compared to March last year, the transaction volume of new houses in Chengdu decreased by 6525 units, a decrease of 41.9%; The transaction volume of second-hand houses decreased by 9415 units, a decrease of 33.4%.
In addition, the main statistical indicators of real estate development in Chengdu have also significantly decreased. From January to March, investment in real estate development in Chengdu decreased by 12.9%. The newly started construction area of commercial housing decreased by 29.1%, and the sales area of commercial housing decreased by 30.7%.
Su Yu, Research Director of Sichuan Company of Zhongzhi Research Institute, told First Financial that the market volume in Chengdu has declined in the first quarter, but the transaction volume of commercial housing still ranks first in the country. The overall inventory of newly-built commercial residential buildings in Chengdu remained stable, with a saleable area of 21.97 million square meters as of the end of March. The clearance period (calculated as 6 months) is 17.7 months, an increase of 1.2 months from the same period last year and an extension of 0.5 months from the previous month.
The sales price index of newly-built commercial housing in 70 large and medium-sized cities released by the National Bureau of Statistics in March showed that the price of newly-built housing in Chengdu decreased by 0.1% month on month, but increased by 2.7% year-on-year, and increased by 3.5% year-on-year from January to March. Both year-on-year increases ranked third among the 70 cities. The second-hand housing price index has decreased both month on month and year on year, but still ranks among the top in the country.
Before Chengdu announced the cancellation of purchase restrictions, cities such as Zhengzhou and Nanjing also introduced a “trade in” policy. Not only that, Nanjing has also issued a new policy, allowing individuals who have legal and stable residences (i.e. have obtained legal property rights housing) in urban areas of the city to apply for their own household registration to move into the housing, as well as their spouses and unmarried children
Su Yu stated that whether Chengdu will further introduce the policy of exchanging old for new depends on whether the effectiveness of the new policy can be clearly demonstrated in the second quarter today. After two years of policy adjustments, the chain of exchanging old for new in Chengdu has become smooth and low-cost, and it has already provided a good channel for exchanging old for new.