Dongguan moves to boost home purchases

Housing transactions have increased in Dongguan, Guangdong province, recently after local authorities loosened the grip over home purchases half a month ago.

A total of 158 vacant second-hand homes were sold in Dongguan just on Monday.

On Dec 26, when the city announced the removal of several home-purchase restrictions, 70 such houses were sold.

"The housing market is recovering, and more potential buyers are making inquiries about home prices," said Wu Yunping, a manager with Beike, a real estate agency.

Wu said the moves are leading to the sales peak of homes, and "we believe that there will be a sales peak of homes after the Spring Festival".

Apart from vacant second-hand homes, 92 new houses were also sold in the city on Monday, according to the local authority.

Easing the home purchase restrictions was part of the local government's efforts to further tap the housing demand and secure the development of the real estate market, according to local housing authorities.

"Compared to many of its peers in Guangdong, Dongguan, as a major city for manufacturing in China, still has a long way to go in terms of its real estate development," said Li Yujia, chief researcher with the Center for Housing Policy Studies, Guangdong Urban and Rural Planning and Design Institute.

There are over 10 million permanent residents in Dongguan, but more than half of them are not local residents, and they mainly live in urban areas, which partly leads to relatively lower housing ownership in the city, Li said.

"Dongguan's housing market is in urgent need of improvements. More supportive moves such as offering subsidies should be in place to stimulate local demand for homes," Li added.

According to China Real Estate Information Corp, a property research institution, the sales area of new houses in Dongguan was 2.43 million square meters in the first 11 months of 2022, down 44 percent year-on-year.

Dongguan's real estate market policy has undergone several rounds of adjustments since last year, reflecting positive signals of boosting housing consumption. For example, families with two children or more in the city were allowed to buy an additional house, according to a notice the Dongguan government issued in May.

Home sales across the country may also recover as authorities have introduced a series of incentives to shore up the sector, including allowing relaxed mortgage rate minimums for first-time homebuyers in some cities, analysts said.

According to a joint statement issued early this month by the People's Bank of China, the central bank, and the China Banking and Insurance Regulatory Commission, cities with new home prices falling for three months in a row on both a monthly and yearly basis are allowed to temporarily maintain, lower or remove the local limits on mortgage rates for first-time homebuyers.

"Reducing mortgage rates will help stabilize home sales and improve real estate development," said Cheng Qiang, chief macroeconomic analyst at CITIC Securities.