Shanghai Takes the Lead in Relaxing Purchase Restrictions in First-Tier Cities by 2026; Expectation of "Increased Volume and Stable Prices" in the Property Market

After the second day of work following the Year of the Horse Spring Festival, Shanghai launched a series of “combination punches” in the real estate market, optimizing policies in multiple areas.

On February 25, the Shanghai Municipal Housing and Urban-Rural Development Management Committee and four other departments jointly issued the “Notice on Further Optimizing and Adjusting the City’s Real Estate Policies” (referred to as the “New Seven Policies”), covering seven aspects including easing purchase restrictions, optimizing housing provident funds, and improving property taxes.

“The ‘Shanghai Seven Policies’ mark another upgrade in the city’s real estate regulation and optimization,” said Zhang Wenjing, General Manager of Shanghai Data at the China Index Academy. She explained that the new policies lower the thresholds for non-Shanghai residents to buy homes, expand eligibility for residence permits, and moderately relax purchase restrictions inside the outer ring road. These measures reduce entry barriers from a policy perspective, which will effectively restore market confidence and reverse the weak market expectations.

At a critical point when the national housing market is bottoming out and recovering, and Shanghai’s market has been steadily warming since the beginning of the year, this new policy features gradual relaxation, zoned measures, and combined efforts. It aims to stabilize expectations, safeguard livelihoods, and promote circulation, and is regarded by industry insiders as a benchmark operation for first-tier city regulation and control.

Gradual Easing of Purchase Restrictions

Li Gen, head of the Lianjia Research Institute in Shanghai, believes that the core logic of the new policies is centered on gradual easing and zoned measures, forming a “qualification + funds + costs” combined approach, which can be summarized as “precise, systematic, balancing market stability and people’s livelihoods.”

Regarding easing purchase restrictions, the new policies specify that non-Shanghai households or singles buying homes inside the outer ring road, with social security contributions continuously paid for at least one year (down from three years), can purchase one property; non-Shanghai households with at least three years of continuous social security payments are allowed to buy an additional property inside the outer ring; residents with a residence permit for five years can buy one property citywide.

“This tiered easing strategy precisely matches Shanghai’s customer structure and housing needs, effectively accommodating both rigid demand and improvement-driven incremental demand, covering a broader housing-buying population, and ensuring that new demand can be channeled into both primary and secondary markets,” said Zhang Bo, President of 58 Anjuke Research Institute.

Song Hongwei, Co-Director of the Centaline Research Institute, estimates that reducing the social security requirement from three years to one for non-Shanghai residents purchasing inside the outer ring could potentially increase the pool of prospective buyers by at least 90,000 people. This group mainly consists of rigid demand buyers and has a significant impact on boosting the outer ring housing market.

Additionally, granting a “housing ticket” qualification to non-Shanghai residents with over three years of residence has a direct effect on releasing improvement-driven demand. Over the past two years, as families grow and their housing needs increase, this group’s demand for a second home has been rising. Moreover, middle-aged non-Shanghai residents over 40 are increasingly demanding better living quality and amenities, with significant potential for improvement demand. This new policy will also help stimulate the release of improvement needs among non-local residents.

“Having a residence permit for five years allows eligibility to purchase property, breaking through the previous restriction that only social security contributions were recognized, further covering stable employment and living populations in Shanghai,” Zhang Wenjing said.

Significantly Increasing Housing Provident Fund Loan Limits

“Optimizing the housing provident fund loan policy is the core measure of this new regulation to enhance payment capacity and facilitate replacement transactions, directly addressing the pain points of upgrading and matching the market’s core needs,” Zhang Bo told reporters.

Regarding the provident fund policy, the new policies specify that the maximum loan amount for first-time homebuyers using the housing provident fund will increase from 1.6 million yuan to 2.4 million yuan. When combined with policies allowing higher loans for families with multiple children and purchases of green buildings (up to 35% increase), the maximum loan amount for provident fund households can reach 3.24 million yuan. The maximum loan amount for purchasing a second home has also been increased accordingly.

Furthermore, the policy enforces “recognize house, not recognize loan” for provident fund loans. It expands support for multi-child families purchasing homes, allowing a 20% increase in the maximum loan amount for second homes based on the city’s highest loan limit.

“Shanghai’s increase of the first-time provident fund loan limit to 2.4 million yuan, combined with policies for multi-children and green buildings raising it to 3.24 million yuan, aligns with the high total price characteristics of Shanghai housing, effectively reducing the down payment and monthly payment pressures for rigid and improvement families,” said Zhang Bo.

Yale Yujin, Vice President of E-House Research Institute, pointed out that the “recognize house, not recognize loan” policy allows more families to access provident fund support for housing replacement, promoting the release of improvement-driven demand. The policy of increasing the second-home loan limit by 20% for multi-child families extends support from first homes to second homes, accurately matching the upgrading needs of such families and aligning with demographic changes.

Optimizing Property Tax Policies

The “New Seven Policies” also made minor adjustments to property tax details to optimize operational guidelines.

According to the latest policies, for Shanghai households with adult children, if after purchasing or replacing a home, the property is the only home of the adult child’s family, property tax will be temporarily exempted.

“Before the new policies, for Shanghai households with children, the first purchase after reaching adulthood was exempt from property tax, but replacement involved this tax. After the new policies, if the replacement property is the only home, property tax will no longer be levied, supporting improvement-driven housing needs,” said Yan Yuejin.

Analysts believe that refining the personal property tax policy is a substantial relaxation for Shanghai households seeking to upgrade or replace homes, effectively alleviating concerns about taxes and fees, and responding to the current low liquidity in the second-hand housing market.

Industry insiders believe that Shanghai’s latest policies will likely lead to “volume increase and price stability” in the housing market.

Zhang Bo summarized the demand activated by these policies into three categories: first, new residents and talents’ first-time purchases inside the outer ring; second, long-term Shanghai residents’ improvement and incremental purchases inside the outer ring; third, Shanghai households’ upgrade and replacement needs. These three demand types are the core rational needs of the market, and their release will effectively stimulate transactions in both new and second-hand housing markets.

Song Hongwei emphasized that the impact of this policy on the second-hand market may be greater than on new homes. Currently, Shanghai’s market has shifted to a stock-based market, with a transaction ratio of 1:5 between new and second-hand homes. Increasing activity in second-hand transactions can not only ease the current liquidity issues but also promote the release of new housing demand through “selling old and buying new,” creating a mutually reinforcing cycle between primary and secondary markets.

According to monitoring data from 58 Anjuke, the proportion of people searching for second-hand homes in Shanghai in 2025 increased by 4.7 percentage points year-on-year, while listings only increased slightly by 1.72%. Zhang Bo noted that this indicates significant potential for releasing rigid first-time demand, which has been limited by high purchase thresholds. The new policies fill this gap effectively.

Li Gen also predicts that the market will see a window of recovery with increased volume, stable prices, and optimized structure, benefiting both rigid and improvement-driven buyers.

Analysts state that as a key indicator of first-tier cities, Shanghai’s stable performance will inject more confidence into the national market.

“Optimizing purchase restrictions and supporting provident fund policies will work together to release accumulated rational demand, driving a synchronized recovery in both new and second-hand markets,” said Zhang Wenjing. She added that increased market activity will help ease the pressure on property developers’ inventory and cash flow, stabilize land markets and local finances, and foster a healthy real estate ecosystem.

(Source: Cailian Press)