HomeTop StoriesShanghai lifts restrictions on home buying to boost its real estate sector

Shanghai lifts restrictions on home buying to boost its real estate sector

The crisis in China’s huge real estate sector has put a major brake on the country’s economy (Hector RETAMAL)

Shanghai has relaxed rules on buying property in the city, as local governments across China look to ease a painful real estate crisis that is dragging down the economy.

Many cities imposed restrictions and strict credit requirements on home purchases more than a decade ago in an effort to stem rising prices and rampant speculation.

But they are now reversing those policies in an effort to reverse an economic slump marked by a debt crisis among developers, low demand and falling prices.

On Monday, economic powerhouse Shanghai, China’s largest and richest city, said it would reduce the number of years people had to live there before they could buy property. Buyers only need to have lived in the city for three years, instead of five.

The megacity also said it would lower the minimum down payment for mortgages on commercial properties to 20 percent, and families with two or more children would be able to buy an additional home.

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The announcement followed similar moves this month in major Chinese cities such as Hangzhou and Xi’an, which eased purchasing restrictions for first-time buyers.

And the central government has taken measures in recent weeks to halt the crisis in the real estate and construction sector, which has long accounted for a quarter of gross domestic product.

This month, Beijing cut the minimum down payment rate for first-time homebuyers to the lowest level in history and suggested the government could buy up unused commercial real estate.

No details were given on how many homes would be purchased.

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