Today, July 15, 2020, Shenzhen local municipal government stepped up new measures to curb local frenzy property market that has made many observers drop jaws.
However, in all other ﬁrst-tiered cities like Beijing and Shanghai, the property markets have been pretty steady without much obvious rise or fall esp in Shanghai where I live and work, making Shenzhen look particularly conspicuous despite the adverse impact caused by the ongoing corona-virus pandemic.
Shenzhen is very special city in China in many aspects: its local economy is primarily driven by private sector in sharp contrast to Beijing and Shanghai, it is a young city with a much younger population, it is a city that most welcomes migrants from within China and grants them household registration status (China hukou system), it is China’s real silicon valley home to many thriving IT, e-commerce unicorn businesses. By the way, Huawei and Tencent, the two giant companies are grown out of that part of China land.
Here are the main measures installed by the new regulation:
1. Repress Property Demand
This is the major blow dealt by the new regulation. Now even people with household registration in Shenzhen shall have to have at least three-year records of paying individual income tax or contributing social insurances in order to be qualiﬁed to purchase local properties in Shenzhen.
Anecdotally, I personally have transferred my household registration to Shenzhen in March of this year just for the purpose of purchasing a property in Shenzhen, there is no requirement of records of personal income and social insurance payments , but now I am kicked out.
In practice, many families, in order to be qualiﬁed for purchasing local properties, conduct fake divorce. Now the new policy speciﬁcally addresses this issue by providing that a divorced person who wishes to buy property within three years after the day of divorce, he or
she would be deemed not divorced when calculating his or her property holdings. This may be the ﬁrst rule of its kind throughout China.