(Yicai) Aug. 25 -- Shanghai has removed the limit on how many homes buyers can purchase in suburban areas, following a similar move by Beijing earlier this month, in an effort to stimulate housing market demand.

Starting tomorrow, Shanghai residents with local household registration, or "hukou," and non-locals who have paid income tax or contributed to social security for at least a year, can buy an unlimited number of homes beyond the city’s Outer Ring Road, according to a notice issued today by the municipal housing authority.

Shanghai hukou holders were previously only allowed to buy up to two homes across the city, while single hukou holders and qualifying non-locals were limited to one. China’s hukou system links a person’s eligibility for services such as healthcare, schooling, and welfare to the locality where they are officially registered.

This policy shift leaves only the central districts of Beijing and Shanghai as well as the city of Shenzhen with buying limits, as other cities have been lifting them since 2022.

The new policy also increases borrowing support for homebuyers. Residents can now apply for a housing provident fund loan of as much as CNY1.8 million (USD251,125), up from CNY1.6 million, when buying new eco-friendly homes. For a second property, the loan cap has been raised to CNY1.5 million from CNY1.3 million. Families with multiple children may qualify for even larger loans.

Beijing introduced similar measures on Aug. 8, scrapping limits on home purchases beyond the Fifth Ring Road. Both the Fifth Ring Road in Beijing and the Outer Ring Road in Shanghai mark the boundaries between urban and suburban zones.

Policy easing has begun to show results in the eastern megacity. In the first half of this year, the combined transaction area of new and secondhand homes in Shanghai reached 13.1 million square meters, the highest since 2022 and a 17 percent increase from a year earlier, according to data from the local housing administration.

In the first seven months, the average price of new homes in Shanghai rose nearly 6 percent year-on-year, the fastest among 70 major cities, based on figures from the National Bureau of Statistics. However, the average price of pre-owned properties fell more than 1 percent amid lingering buyer caution.

Editor: Emmi Laine