A man examines property models at a housing sales center in Hangzhou, capital of Zhejiang province. [Photo/China Daily]
China has eased property investment rules for foreign individuals and institutions across the country, enabling qualified foreign institutional and individual investors to buy more properties on the Chinese mainland, authorities announced in a circular on Thursday evening.
The announcement, posted on the website of the Ministry of Commerce, said that foreign institutional investors are exempt from registration fees when taking out domestic and foreign loans for property and settling foreign exchange transactions.
Foreign individuals and companies are now allowed to buy as many properties as they wish, but they are still subject to local housing purchase limits, such as that in Shanghai, where people without a Shanghai household registration are allowed to buy only one property.
Previously, foreign residents were allowed to buy no more than one property on the mainland and had to first have worked in China for a year.
Analysts said Thursday's move was an adjustment under current market conditions, since housing prices are stabilizing and the market is mature enough to open to foreign capital.
"Before, when foreign capital came into China's domestic property market, housing prices surged to a level that Chinese residents could not afford, and the pace of the housing price rises was so much faster than that of local residents' income," said Tao Wei, a property agent with Shanghai Tianyou Property.
In 2009, when a high-end property project was launched in central Shanghai, foreign investors flocked to buy, according to a Xinhua report, and one extended family purchased 48 units at one time.
The previous house purchase limits were made under such particular circumstances, and they end because the market has changed, said Tao.
For foreign investors who have worked in China and want to own housing, the policy change is good news that will help them buy property, but it will not significantly affect housing prices nation-wide because the increase in demand will be marginal compared with the huge inventories across the nation, market insiders said.
Properties in Beijing and Shanghai are most sought after by foreign investors. As purchase limits still exist in these key cities, speculation will not be a danger, said James Macdonald, research director at Savills East China.
In second-and lower-tier cities without purchase limits, foreign investors may be spurred to buy properties to meet housing demands, but it is not likely they would buy many more than they need for their own purposes, such as for value growth or rental return, as the yields in these cities are lower than in other world gateway cities, according to Zhang Hongwei, chief analyst of Tospur Real Estate Consultancy.