Nanjing ended the decades-long restrictions on housing purchases.

On Thursday evening, Nanjing issued the "Latest Measures to Promote the Development of the Real Estate Market in Nanjing", in order to implement the central government's requirements for meeting the demand for properties of residents, either for upgrade or for primary residence. Based on the "Further Optimizing Policy and Measures to Promote the Stable and Healthy Development of the Nanjing Real Estate Market" issued on August 4, six new policies were announced, which is a follow-up to the Eight Measures.. Follow the latest national credit policies.

Under the new policy, local governments should implement the central gvoernment’s new housing credit policies and cut the interest rates of first home loans, in order to better meet the demand for an upgrade or buying primary residence.

Interpretation: On August 31, the "Notice of the People's Bank of China and the China Banking and the National Administration of Financial Regulation on Adjusting and Optimizing Differentiated Housing Credit Policies" clearly stipulated that for households who apply for loans to purchase commercial housing, the minimum down payment percentage for first-time home buyers is unified at no less than 20%, and no less than 30% for second-time home buyers.

The lower limit of the interest rate policy for first-time home buyers' commercial housing loans is implemented according to the current regulations, and for second-time home buyers, the lower limit is adjusted to no less than 20 basis points higher than the quoted interest rate of corresponding period's loan market.

It clarifies that the down payment as a percent of the purchase price for the first home in Nanjing is 20% and the percentage for the second home is 30%. The first-home buyers can enjoy preferential mortgage rates regardless of previous credit records, and the interest rate for existing home loans is lowered.

2. Preconditions for purchase are no longer required in some districts

Under the new policy, in order to further optimize the process of purchasing a house, the purchase of commercial housing in Xuanwu District, Qinhuai District, Jianye District, Gulou District no longer requires any precondition for purchase from September 8.

Interpretation: Nanjing has completely lifted the purchase restrictions. This is the second provincial capital city in China to follow suit after Shenyang. It is expected that Hangzhou, Suzhou, and other strong second-tier cities will follow suit to implement this policy. According to the previous policy, individuals under the age of 35 with college degrees only need to pay social insurance to have Hukou in Nanjing, making the competition for attracting talents in the city more intense.

3, Introduction of housing tickets as a resettlement method for collectively-owned land

Under the new policy, for the collective land expropriation involving residential properties, it is encouraged that the house owner choose housing tickets for resettlement. It will meet the diverse resettlement needs of the people involved, shorten the resettlement transition period, and the specific implementation rules will be formulated by each district.

Interpretation: Housing ticket resettlement encourages home purchases, which helps to stimulate the sales of new houses.

4, Introduction of subsidies for purchasing new houses

Under the new policy, in some areas, subsidies will be provided for the purchase of newly built commercial housing from August 1, 2023 to December 31, with specific subsidy standards and conditions subject to the detailed rules of each district.

Interpretation: This policy applies to the new six districts (Jiangbei New District, Jiangning District, Pukou District, Liuhe District, Lishui District, and Gaochun District), Qixia District (Longtan Street, Qixia Street), Yuhuatai District (Guxiong Street, Banqiao Street, Yuhuatai Economic Development Zone, and the southern area of Xishanqiao Street and Qinhuai Xinhe). The subsidy standard is not less than 1% of the total contract price, with specific subsidy standards and conditions subject to the detailed rules of each district.

5, Introduction of "trade-in" subsidies

New policy proposes: On the basis of the subsidy mentioned in the fourth article, additional subsidies will be given to those who sell their own houses and purchase newly built commercial housing with an area of more than 90 square meters, with specific subsidy standards and conditions subject to the detailed rules of each district.

Interpretation: On the basis of enjoying the subsidy for purchasing new houses, additional subsidies will be given to those who sell their own houses and purchase newly built commercial housing with an area of more than 90 square meters, and the subsidy is not less than 0.5% of the total contract price. Families and individuals with houses are encouraged to trade-in for new houses, with subsidies for houses larger than 90 square meters, but it may be more difficult to sell second-hand houses below 90 square meters.

6, Introduction of "trade-in purchase" service

Under the new policy,  the Nanjing Real Estate Industry Association and the Real Estate Brokerage Industry Association, together with key brokerage firms, have launched the "Trade-In Purchase" service and set up a "Trade-In Purchase" supermarket. The housing resources in the supermarket are priced no higher than the lowest price in the sales center. Through the guaranteed transaction service of "Prioritised Selling, Reassured Buying", the goal is to shorten the selling period of second-hand houses and the period of purchasing new houses, and to meet the need of residents' housing upgrade faster.

Interpretation: This policy is aimed at better meeting the demand for  housing upgrade, such as "trading small for large" and "selling old for new", and leveraging the gradient consumption and linkage effects of the first and second-hand housing markets.  It is to reduce the burden and provide benefits to the housing uograde group, and improve the efficiency of housing replacement for residents.

In August 2023, the transaction volume of new residential properties in Nanjing was 292,600 square meters, a decrease of 17% compared to the previous month, marking the fifth consecutive month of decline and the lowest point in nearly a year. The average transaction price was 26,970

yuan per square meter, a decrease of 20% compared to the previous month. As of the end of August, the city's housing inventory was 7.37 million square meters, with a turnover period of about 25 months, indicating significant pressure. Although Nanjing previously lifted purchase restrictions in peripheral areas, the market did not see significant improvement in sales volume. Recently, apart from high-quality land parcels in the core area attracting attention from branded real estate developers, most land have been sold at bottom prices.

With the comprehensive cancellation of purchase restrictions in Nanjing, coupled with new policies such as preferential mortgage rates for first-home buyers regardless of previous credit records and lowering down payment ratios, it is expected that the demand for housing upgrade will be unleashed in September and October.

It is expected that the first-tier cities will optimize purchase restriction policies, while most second and third-fourth tier cities will completely lift purchase restrictions.

From the perspective of the actual implementation of policies in first-tier cities, a pattern of targeted easing of rules is emerging.

Shanghai announced on Thursday that it will adjust the work experience requirements for key supporting units in Lin-Gang Special Area. Based on the industrial development orientation and urban functional development needs of the Lin-Gang Special Area, a list of key supporting units for talent housing policies will be established. The work experience requirement for talents working in key supporting units will be reduced from 6 months to 3 months.

Currently, Shenzhen has lifted purchase restrictions for non-residential commercial office properties and business apartments for residents from Hong Kong and Macau.

Most second, third and fourth-tier cities have an oversupply in the real estate market, facing significant pressure to reduce inventory, and it is expected that they will follow suit and lift purchase restrictions.

Since the end of August, Jiaxing, Shenyang and Dalian have completely lifted the purchase restrictions and Tianjin has eased the restrictions. Nanjing, a strong second-tier city, has followed suit, and it is expected that other high-level second-tier cities such as Hangzhou, Suzhou, Chengdu, Wuhan, etc., will also follow this policy. Similar to the adjustment of Nanjing, restrictions will be canceled first in non-core areas and if there is still pressure on inventory, further lifting of restrictions will be implemented. It is expected that ordinary second, third and fourth-tier cities will completely remove the real estate market restrictions, and stimulate the market through a combination of policies.

(This article was first published on the TMTPost App, author | Wang Jian)

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