Shanghai ‘has eased restrictions on purchase of second property’

Shanghai eased home purchase restrictions to allow a broader pool of buyers to purchase a second property in China’s financial centre, the Shanghai Securities News reported yesterday.

The city loosened its definition of locals to allow residence permit holders who have lived in the city for at least three years to buy a second home, the newspaper said, citing an unidentified official of the city’s housing regulator.

It previously limited the second-home option to locals, or those born in the city or who worked for an extended period of time and were officially recognised as locals, without specifying guidelines for non-locals.

“This is certainly a measure of easing,” said Mr Jack Gong, an analyst at Jefferies Group. “But the easing by the local government doesn’t mean the central government will loosen its property controls.”

Officials from Shanghai and Beijing said earlier this year that they plan to keep their home purchase restrictions this year. China will not waver on its real estate controls and efforts to bring prices down to a reasonable level, Premier Wen Jiabao said on Feb 12.

The latest easing may boost the city’s home sales by 20 per cent to 30 per cent, according to Jefferies.

Chinese developers traded on mainland and Hong Kong exchanges rose after the report. The Shanghai Composite Index closed up 0.9 per cent to 2,403.59, while the Hang Seng Index added 0.3 per cent to 21,549.28 in Hong Kong.

The report comes a week after the eastern city of Wuhu reversed a decision to waive a deed tax and subsidise some purchases on Feb 9.

It is not clear if the Shanghai easing will hold because the restriction on home purchases “is the most critical” tightening policy for the central government, said Mr Johnson Hu, a Hong Kong-based analyst at CIMB-GK Securities Research.

About 671,000 residents in the city of 20 million were issued residence permits as of March 2009, China Business News reported yesterday, citing the local statistics bureau. Residents with at least a year of tax records in the city are allowed to buy one home.

Source : Today – 23 Feb 2012

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