What are the benefits of the new policies for homebuyers? How will they impact market trends? Experts interpret Shanghai's "New Seven Policies" for the real estate market

On February 25, the Shanghai Municipal Housing and Urban-Rural Development Commission, the Shanghai Housing Management Bureau, and three other departments jointly issued the “Notice on Further Optimizing and Adjusting the City’s Real Estate Policies” (hereinafter referred to as the “Notice”), which includes seven policies in three areas: reducing housing purchase restrictions, optimizing housing provident fund loans, and improving personal property tax policies.

What benefits do the “New Seven Policies” bring to homebuyers? How will they impact the future trend of Shanghai’s real estate market? On February 25, in response to public concerns, Pengpai News interviewed several industry experts to interpret the new policies and analyze their potential effects and market outlook.

Lowering the threshold for home purchases to support stable housing demand

To serve the goal of livable and comfortable housing, promote balanced employment and residence, and meet residents’ reasonable housing needs, the “Notice” clearly states further reductions in housing purchase restrictions: First, shorten the required years of social security or individual income tax payments for non-Shanghai residents to buy housing inside the outer ring road; second, eligible non-Shanghai residents can purchase one additional property inside the outer ring; third, non-Shanghai residents holding a “Shanghai Residence Permit” for five years or more can buy one property in the city without providing proof of social security or tax payments.

According to the new policy, non-Shanghai residents who have continuously paid social security or personal income tax in the city for at least one year before purchasing a home can buy unlimited properties outside the outer ring, but are limited to one property inside the outer ring; those who have paid for three years or more can buy up to two properties inside the outer ring. Residents with a “Shanghai Residence Permit” for five years or more are limited to one property citywide.

“Analyzing the reduction of purchase restrictions, this policy lowers the threshold and increases the number of properties one can buy,” said Yan Yuejin, Deputy Director of the Shanghai E-House Real Estate Research Institute. “The social security payment requirement for non-Shanghai residents purchasing inside the outer ring has been shortened to one year. For families with three or more years of social security, they can now purchase two properties inside the outer ring, indicating that the barrier for non-Shanghai residents buying in Shanghai has further decreased, and the waiting cost is reduced.”

At the same time, the new policies support the housing needs of stable residents. Before the policy adjustment, individuals working in urban basic services or with company headquarters outside Shanghai often lacked qualification to buy property due to not paying social security in Shanghai. The “New Seven Policies” now allow those holding a residence permit for five years or more to qualify for home purchases, regardless of social security contributions. “In other words, previously, purchase restrictions mainly depended on social security payment years, but now they can also be linked to residence permit duration,” Yan Yuejin explained.

Lu Wenxi, an analyst at Centaline Property, believes that the optimization of purchase restrictions broadens coverage and can meet diverse rigid and improvement needs. “Now, just one year of social security is enough to buy at least one property, with no distinction between inside and outside the ring.” He told reporters that current high-end improvement demand is quite evident, especially for new homes or locations with good districts, and the policies precisely target these buyers. For non-Shanghai residents with three or more years of social security, previously they mainly replaced their homes by selling first and then buying; now they can buy first and sell later, or even purchase a second property directly.

Optimizing “recognition of house, not loan” for provident fund loans to reduce borrowing costs

To further leverage the support role of the housing provident fund in housing consumption and meet residents’ needs at different stages, the “Notice” also optimizes the housing provident fund policies: first, moderately increase the maximum loan amount; second, improve the recognition of the number of loans; third, expand support for multi-child families purchasing homes.

Regarding loan amounts, the new policy clarifies that the maximum provident fund loan for a family purchasing their first home is increased from 1.6 million yuan to 2.4 million yuan. With additional policies for multi-child families and green buildings (up to 35% increase), the maximum loan amount in the city can reach 3.24 million yuan. The maximum loan amount for a second home is also increased accordingly.

Lu Wenxi believes that increasing the loan limit allows borrowers to enjoy lower interest rates and reduce costs. “Currently, the interest rate for provident fund loans is much lower than commercial loans, so borrowing more from the provident fund helps ease repayment pressure,” he said. “Especially for first-time buyers, purchasing homes under 3 million yuan, the increased loan cap to 2.4 million yuan can fully meet their needs. Coupled with previous policies supporting multi-child families and green buildings, the maximum loan can reach 3.24 million yuan, significantly easing monthly payments and total interest expenses. However, the final loan amount depends on the borrower’s provident fund account balance and other factors.”

In terms of recognizing multiple loans, the new policy clarifies that for residents who have used provident fund loans before, if they currently own no property or only one property and have fully repaid previous loans, they can apply for a new loan when purchasing again in the city.

“This indicates that the conditions for provident fund loans in Shanghai are further relaxed, implementing the ‘recognize house, not loan’ principle,” Yan Yuejin said. “Previously, if someone had used the provident fund loan twice, they could not apply for another. Now, as long as they have no property or only one property and have repaid previous loans, they can continue to access the fund. This allows more families to benefit from provident fund support and promotes the release of housing improvement demand,” he added.

The policy also extends the support for multi-child families from first-time purchases to second homes, with the maximum loan amount for second homes increased by 20% over the city’s maximum loan limit. “Treating second homes like first homes, the new provident fund policy will cover more improvement-oriented families and further release diverse demands,” said Lu Wenxi.

More humane personal property tax policies to reduce holding costs

To support residents’ replacement and improvement needs, the “Notice” stipulates that starting January 1, 2026, for families with adult children who purchase a home that is the only property of the adult children’s family, personal property tax will be temporarily exempted. Specifically, if the property was jointly owned with parents or grandparents before the child turned 18 (or before the city’s personal property tax pilot), and the new or replaced property still remains the only property of the adult children’s family, it will be temporarily exempt from property tax.

“Personal property tax policies are now more humane,” Lu Wenxi said. “Previously, some buyers had to pay property tax after their children turned adult and purchased new homes, even if it was their family’s only property, which affected new demand. This policy addresses such practical issues, reducing concerns and holding costs for relevant groups.”

Further releasing reasonable demand and consolidating a stable and positive real estate market

What impact will these new policies have on the market trend?

Yan Yuejin believes that the “New Seven Policies” fully reflect Shanghai’s comprehensive, city-specific approach, leveraging both stock and incremental policies, with broad coverage and targeted measures. Overall, they demonstrate further support for various housing needs, including employment-residence balance, livability, and improvement needs. By continuously lowering purchase costs, they will promote active housing consumption and balance supply and demand, consolidating the current stable and positive market trend.

“Considering that the market adjustment is largely complete, housing prices are gradually stabilizing, and multiple favorable policies are stacking, we believe that these policies will not only boost transaction activity across different sub-markets but also promote healthy cyclical development among them, especially facilitating smooth replacement chains,” Yan said. For example, non-Shanghai residents now only need one year of social security to buy inside the outer ring, which could accelerate market entry. “If they purchase a second-hand property, it will stimulate sellers to list and facilitate replacements, also helping to reduce inventory in new housing markets. This will create a more positive and interactive cycle among markets, strongly supporting stable and healthy real estate development.”

Lu Wenxi sees that these policies will further release reasonable housing demand and help Shanghai’s market to develop more steadily throughout the year. “I believe Shanghai’s real estate market has a good start this year. Coupled with previous initiatives like relocation and resettlement housing pilot programs and state-owned enterprise acquisitions of second-hand homes, the market will become more solid. As transaction volume steadily increases, prices are expected to recover from the bottom quickly,” he said. “With orderly policy implementation and stable execution, the market’s upward trend can be further solidified, accelerating the healthy and stable development of the housing market.”

Source: Pengpai News

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