Even as major cities loosen their limits on purchases, China’s current house values fell at a faster rate last month, underscoring the need for more widespread assistance.
China Relaxes Property Rules
In an effort to further market reform and draw in international investment, China’s foreign exchange regulator recently announced plans to simplify the nation’s regulations governing cross-border finance and investment.
According to a statement released by the State Administration of Foreign currency late Monday, businesses are no longer prohibited from utilizing foreign currency revenue under capital accounts to buy residential real estate that is not for their own use. Additionally, the regulator loosened restrictions on the use of foreign currency for home purchases throughout the country, enabling foreigners to make payments sooner.
Evolving Real Estate Policies
According to the regulator, the amended regulations have been put into place to support the growth of the real estate market. The property-related policy limits were put in place to stop speculative “hot money” in the real estate industry. Despite the relaxation of purchase restrictions in key cities, China’s existing house values fell at an accelerated rate last month, underscoring the need for wider assistance.
“The circumstances of the Chinese real estate market have evolved, and industry-wide macro-control mechanisms have been improved and modified,” the regulator said. “In light of this, it is now essential to optimize and modify the relevant foreign currency management strategies in order to better suit the changing conditions and demands and to promote the stable and sound growth of the real estate market.”
Prolonged Housing Market Slump
For almost four years, the country has been experiencing a housing downturn, with sales continuing to decline since the second quarter. According to Bloomberg Economics, there is little chance of a recovery since the overall economy seems to have weakened much more in the second half of August.
Additionally, the regulator said that foreign currency earnings made by foreign-invested businesses might be reinvested locally and eliminated the need for registration for initial costs and reinvestments. In an effort to boost the sector’s expansion, it also increased the foreign loan limits for high-tech businesses.