China has become the latest country in Asia to ease property investment rules for foreigners, according China Daily. The new rules will allow qualified foreign institutional and individual investors to buy more properties on the mainland of China.
The Chinese Ministry of Commerce made the announcement last week which said that foreign investors will now be exempt from registration fees when taking out domestic and foreign loans for property and settling foreign exchange transactions.
While the restrictions on the number of properties foreign individuals and companies can purchase have been removed, there are still local housing purchase limits in effect that they will be subject to. In Shanghai for instance, people without a Shanghai household registration are allowed to buy only one property, China Daily explained.
The previous regulations allowed foreign residents to buy only one property in Mainland China after they had spent a year working in China. The decision to eliminate the rules on foreign ownership was made by the government who believes the market is finally ready to handle an influx of foreign capital after housing prices have stabilized in the country.
“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, told the newspaper.
The policy change will benefit foreigners who have worked in China and want to invest in the country’s property market. However, the increase in demand will be marginal compared with the huge real estate stock across the country. It’s unlikely the new rules will significantly affect housing prices nation-wide.
James Macdonald, research director at Savills East China added that 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.
