By WANG Yuhan
Guangzhou, the capital city of Guangdong Province, has decided that people without local hukou (household registration) now only have to pay taxes for two years to buy a house in the city, instead of the previous five years. Once they own a home, the wait before qualifying for a VAT exemption is reduced from five years to two years.
The new policy was announced on September 20 and takes effect immediately. The government also said it would increase the rental supply and make rents more affordable.
Guangzhou was the first first-tier city to lower mortgage rates last month after the central government told cities to do so on August 30. This time, smaller cities have moved ahead first. At least Nanjing, Wuhan and Jinan have eased home-buying restrictions since the beginning of September.
A shorter wait for VAT exemptions will boost the second-hand market. A plethora of second-hand houses went on the market following the mortgage rate cut, suppressing prices.
Guangzhou’s housing market, usually one the hottest in the country, has been lukewarm at best recently. In August, new and second-hand prices dropped by 0.3 percent and 0.6 percent, the latter the biggest drop among first-tier cities. New house sales increased by 15 percent and 6 percent in the first two weeks of September but decreased in the following week.
Guangzhou now has the lowest mortgage rate and the most friendly buying policies among first-tier cities. The hope is that higher demand will stabilize prices, anchor confidence and reinvigorate the housing market.
