A prospective home buyer makes inquires about a new apartment project at a real estate fair in Yichang, central China's Hubei Province. (Photo : www.theepochtimes.com)
Qualified foreign institutional and individual investors can now buy more properties on the Chinese mainland after the Chinese government eased property investment rules for foreign individuals and institutions across the country, as announced in a circular on Thursday evening.
According to the announcement posted on the website of the Ministry of Commerce, foreign institutional investors are exempt from paying registration fees when applying for domestic and foreign loans for property and paying for foreign exchange transactions.
Under the relaxed measure, foreign individuals and companies can now buy as many properties as they wish, but they must still observe local housing purchase limits, such as that in Shanghai, where people without a household registration are allowed to buy only one property.
Previously, under the old rule, foreign residents were allowed to buy only one property on the mainland and they had to first work in China for a year.
Analysts said that the move was made to adopt to current market conditions, as housing prices are becoming stable 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," Tao Wei, a property agent with Shanghai Tianyou Property, said.
Tao added that the previous house purchase limits were made under such particular circumstances, and they end because the market has changed.
According to market insiders, the policy change is good news for foreign investors who have worked in China and want to own houses, since it will help them buy property. However, it will not affect housing prices nationwide because the increase in demand will only be minimal compared with the huge inventories across the nation.
James Macdonald, research director at Savills East China, said that speculation will not be a danger in key cities, such as Beijing and Shanghai, where properties are most desired by foreign investors since purchase limits still exist.
Zhang Hongwei, chief analyst of Tospur Real Estate Consultancy, said that foreign investors in second- and lower-tier cities without purchase limits may be driven 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.
