Shanghai lifts restrictions on home purchases to boost real estate sector

Shanghai has relaxed rules on purchasing property in the city as local governments across China seek to ease the 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 attempt to tamp down skyrocketing prices and rampant speculation.

But now they are reversing that policy in an attempt to stem an economic recession characterized by a developer debt crisis, low demand and falling prices.

On Monday, economic powerhouse Shanghai – China’s largest and richest city – said it would shorten the number of years people must live there before they can buy property. Buyers only need to live in the city for three years, not five.

The megacity also said it would lower the minimum down payment for commercial mortgages to 20 percent and allow families with two or more children to purchase an additional home.

The announcement follows similar moves in major Chinese cities such as Hangzhou and Xi’an this month, easing shopping restrictions for first-time buyers.

In recent weeks, the central government has taken action to stem the crisis in the real estate and construction sectors, which have long accounted for a quarter of gross domestic product.

This month, Beijing lowered the minimum down payment rate for first-time homebuyers to its lowest level ever and suggested the government could buy up unused commercial properties.

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

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