On September 29, 2024, China announced significant reforms aimed at supporting its struggling property sector, particularly in its financial hub of Shanghai. The city has eased regulations for homebuyers, becoming the first major city to implement the central government’s latest measures to stimulate the market.
The new rules will enable individuals without local household registration to buy homes more easily, reducing the required duration for social security or individual tax payments from three years to one year. Additionally, these buyers will now be permitted to purchase the same number of properties as local residents, allowing them to acquire at least two homes, compared to just one previously.
In a parallel effort, the People's Bank of China announced that homeowners can renegotiate mortgage terms starting November 1, 2024. This move aims to lower borrowing costs for approximately $5.3 trillion in outstanding mortgages, providing relief to millions of families. Homeowners with fixed mortgage rates will be able to adjust their loans based on the latest loan prime rate, a key benchmark for mortgage lending.
These initiatives reflect China’s urgent response to the ongoing challenges in its property market, which has faced significant downturns in recent years. The implications of these reforms could have considerable effects on the global economy, particularly as China's real estate sector is a crucial component of its overall economic health.
As the world's second-largest economy, developments in China’s property market are closely monitored by international investors and policymakers. The effectiveness of these measures will be critical in determining the future stability of both the domestic and global markets.