People view the sandbox model of a real estate project in Taiyuan, North China's Shanxi Province, on June 17, 2024. Photo: VCG

Major Chinese cities including Shenzhen, Shanghai, and Beijing have further relaxed their real estate policies, with Shenzhen in South China's Guangdong Province becoming the latest first-tier city to reduce taxes for transactions involving larger houses. 

The city said in a notice that it will eliminate the distinction between ordinary and non-ordinary housing starting on December 1, as the move will unify favorable tax policies for the two categories. 

Non-ordinary houses that have been owned for two years or more will enjoy the same exemption from the 5 percent value-added tax (VAT) as ordinary homes during transactions, per the notice.
 
In Shenzhen, non-ordinary housing usually refers to homes with floor areas of more than 144 square meters.

Beijing and Shanghai previously announced that they would scrap the distinction between ordinary and non-ordinary housing. 

Recent market conditions have shown an obvious effect from the targeted measures, as the impact would be greater in major cities where housing prices are higher, said Yan Yuejin, research director at Shanghai-based E-house China R&D Institute. 

The housing market in first-tier cities has been recovering at a relatively faster pace for both new and secondhand homes, Yan told the Global Times on Wednesday.

Yan noted that the implementation of favorable policies will further drive the real estate market in first-tier cities in a positive direction, adding that the policies will create a sustained demand for homes in these cities. 

Following the relaxation in these three major cities, Yan expected a more positive market performance as the effect of tax cuts usually can be reflected immediately. 

With the gradual implementation of relevant policies taking effect, there have been some positive changes in the real estate market, which can be reflected through the rising numbers of housing visits and transactions, Zhu Hexin, a deputy governor of the People's Bank of China, said on Tuesday, stcn.com reported.   

Chinese authorities on November 13 rolled out tax policies to support the steady and healthy development of the real estate market, as the country will increase incentives in terms of deed tax to actively support people's essential housing needs and their demand for improving their housing conditions. 

Amid these emerging pro-housing policies, the property market has displayed positive changes in October. 

The decline in the prices of commercial residential homes in China's 70 large and medium-sized cities generally moderated on a month-on-month basis in October, said the National Bureau of Statistics (NBS) on Friday.

New home prices edged down by 0.2 percent, narrowing from the previous month's drop of 0.5 percent in the first-tier cities - Beijing, Shanghai, Guangzhou and Shenzhen, according to the NBS.

Global Times