Shanghai relaxes home buying restrictions for eligible families

Shanghai on Monday announced adjustments to its real estate policies, removing restrictions on the number of homes eligible families can buy outside the city's Outer Ring Road.

Under the new policy, local households and single residents face no purchase limits outside the Outer Ring Road, while inside the Outer Ring Road, they may buy up to two homes.

Non-local households and singles who have paid social insurance or personal income tax in Shanghai for at least one year may buy unlimited homes outside the Outer Ring Road. Those with at least three years of tax or insurance records may buy one home inside the Outer Ring Road.

The adjustments, aimed at supporting homebuyers and stabilizing the real estate market, were jointly released by six departments, including the Municipal Housing and Urban-Rural Development Commission, the Housing Authority, the Finance Bureau, the Tax Bureau, the Shanghai branch of the People’s Bank of China, and the Housing Provident Fund Center.

To boost affordability, the maximum loan limit for first-home provident fund mortgages will rise from 1.6 million yuan (US$223,680) to 1.84 million yuan, with multi-child families eligible for up to 2.16 million yuan. Second-home limits will rise from 1.3 million yuan to 1.495 million yuan.

Borrowers purchasing two-star or higher-rated green buildings will also be eligible for an additional 15 percent loan ceiling. In addition, buyers can now withdraw their and their spouse’s housing fund savings to pay down payments, without affecting loan eligibility.

Commercial banks in Shanghai will no longer differentiate between first and second homes in setting loan rates. Instead, rates will be determined by the city’s market-based pricing mechanism and the borrower’s risk profile, aimed at lowering financing costs for buyers.