Shanghai will lower entrance fees and offer subsidies to revive the real estate market

The eastern Chinese megalopolis of Shanghai, considered the economic capital of the asian countryannounced a package of measures to revive the real estate market, among which the withdrawal of restrictions, the reduction of entry fees or subsidies for those who sell to buy stand out.

In a statement released Monday night, the city’s Office of Housing Management detailed nine measures aimed at “promote the stable and healthy development of the real estate market”.

For example, familieswith difficulties” who sell their home will be able to receive a subsidy of up to 30,000 yuan (US$ 4,221, 3,882 euros) if they buy a new apartment within a year.

Likewise, entry fees for people buying their first home will drop from 30% to 20%, and the minimum mortgage rate will be reduced from 4.1% to 3.5%. In the case of those who wish to buy a second one, the down payment will be 35% instead of 50% and the minimum rate for mortgages falls from 4.5 to 3.9%.

Shanghai, which banned households from buying a third home in 2011 to reduce pressure on the market, will now allow families with two or more children to buy an additional one, and will also lower requirements for people from other parts of the country. may choose to own a property.

The city has about 8 million square meters of new homes, something that would take more than a year for the market to digest at the current rate of sales, according to data from the consulting firm China Real Estate Information cited by the Hong Kong newspaper South China Morning Post.

This newspaper cites Yan Yuejing, director of the firm E-house China Research, who assures that other important cities such as Beijing, Shenzhen and Canton will follow in Shanghai’s footsteps with similar measures soon after the authorities announced a new package of safety measures. support for the real estate sector, mired in a long crisis.

In the middle of the month, Chinese authorities announced some US$42.25 billion in loans for subsidized housing projects or the reduction of the entry fees required to purchase homes – to 15% for buyers of the first and 25% for the second. -, also urging local governments to buy undeveloped land or properties not sold to developers.

The financial position of many Chinese real estate companies worsened after, in August 2020, Beijing announced restrictions on access to bank financing for developers that had accumulated a high level of debt, among which Evergrande stood out, with a liability of almost US$ 330,000 million.

Given the situation, the Government has promoted various support measures, with state banks also opening multimillion-dollar lines of credit to various developers, to whom the completion of projects sold off plan was marked as a priority, an issue that worries Beijing due to its implications for social stability, since housing is one of the main investment vehicles for Chinese families.

However, the market is not responding: commercial sales measured by floor area plummeted 24.3% in 2022 and another 8.5% in 2023.

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