The seven-item policy package easing homebuying restrictions in Shanghai is expected to consolidate market stabilization, unleash diverse housing demand, and thereby promote the formation of a benign market mechanism that effectively supports the stable and healthy development of the property market, said industry experts.

By optimizing existing measures, including lowering the threshold for nonlocal buyers without household registration permits (hukou) in Shanghai, the policy is expected to boost market confidence, enhance the city's attractiveness and further contribute to its sustainable development, they said.

The policy was announced on Wednesday with the aim of further optimizing policies and measures in Shanghai's real estate market to better reflect current housing market conditions.

"The measures were introduced against the backdrop that the real estate market across the nation is approaching the point of bottoming out, and the policy is precisely calibrated," said Zhang Bo, head of the Beijing-based 58 Anjuke Research Institute.

"The policies cover multiple areas, including loosening homebuying limits, lowering the threshold for housing provident fund loans to meet diverse housing needs and refining the city's property tax exemption conditions. In aggregate, the measures aim to stabilize the market, optimize supply and improve circulation from several dimensions," Zhang said.

"As the policy gradually takes effect after the Chinese New Year, Shanghai is likely to become the benchmark for stabilization and recovery among the nation's first-tier cities, and further drive the broader recovery in key cities across the Yangtze River Delta region," he said.

Effective Thursday, the new policy is part of the city's latest effort to reduce homebuying restrictions and better meet people's reasonable living needs, according to the notice.

Nonlocal families or single buyers are eligible to purchase residential properties within the city's Outer Ring Road as long as they have paid taxes in Shanghai for at least one year, and those who have paid taxes in Shanghai for three years can buy an additional apartment.

In the meantime, nonlocal families or single adults who have held Shanghai residence permits for five years or more are allowed to purchase one housing unit without any income tax payment requirements, the notice added.

Yan Yuejin, deputy head of the Shanghai-based E-House China R&D Institute, said the newly introduced policy is both in line with the city's specific conditions and the central government's guidelines in housing consumption.

"By benefiting a broader spectrum of people with various homebuying requirements, it would work together with existing measures to continuously reduce housing costs, stimulate demand for housing consumption, strike a balance between supply and demand, and further consolidate the housing market's stable development," Yan said.

Li Yujia, a researcher on residential policy in Guangdong province, said the measures — focused on boosting residential property demand — send clear and positive signals that the housing market is poised for stabilization in the coming months.

"Multiple factors, including favorable policies, real estate developers' launch of cost-effective products and the conventional transaction peak, are expected to work together to support stronger property transactions in March. With support of the policies and improved market expectations, more eligible homebuyers are expected to make their purchasing decisions in April and May, thereby guiding the local housing market toward stabilization in the first half," Li said.

Li added that a substantial portion of the measures is specifically designed for nonlocal buyers, aimed at stimulating transactions in the preowned housing market and boosting new home sales.

Accounting for about 40 percent of Shanghai's population, nonlocal buyers show a strong willingness to own residential properties in the city. Therefore, stimulating their homebuying demand is crucial for absorbing existing housing inventories, stabilizing preowned housing prices and promoting market circulation, Li said.