24 September 2018

Marked disparity in cities leads to housing policy fine-tuning

When Beijing recently reiterated its policy stance to rein in runaway home prices in most of the nation’s urban centers, Wenzhou — a barometer of China’s private economy and the epitome of realty speculation and hysteria in previous years — scrapped the rules restricting the number of home purchases in the city.

So far the central government has raised no objections to Wenzhou’s apparent act of defiance, China Securities Journal reports.

Instead of formulating a one-for-all policy package to regulate the nation’s home market, top decision makers have adopted a more pragmatic approach to fit in at various local levels, where actual situations can be poles apart.

Wenzhou’s policy loosening was made against the backdrop of a housing market where prices, after a roller-coaster ride, have been on the slide for more than 20 months in a row due to oversupply.

The same is also happening in Ordos {鄂爾多斯}, a city in northern China’s Inner Mongolia Autonomous Region that shot to fame not too long ago because of its eye-popping investment in new town development through a government financing vehicle.

But amid lackluster business and commercial activities in the city, most of the new homes remain vacant and the municipal authorities have reportedly abandoned all measures to regulate the realty sector.

Meanwhile, the housing market in other places is still red-hot. Shanghai-based realty consulting firm E-house China says that based on its monitoring of 30 cities in September, home sales in top and second-tier cities soared by 16 percent and 15.3 percent respectively, while the figure for lower-tier ones stood at a paltry 1.4 percent.

So when Wenzhou cadres are pushed to loosen their grip on the market for a painful destocking process, their peers in Nanjing, Zhengzhou and Xiamen are rolling out tougher measures ranging from additional levies to mortgage bans to dampen the speculation fever in those cities.

Xinhua reports that the Ministry of Land and Resources has urged key cities to boost land supply in the short to medium term. The state mouthpiece also reveals that cities experiencing lingering stagnation can be exempted from further nationwide crackdowns and their land supply adjusted according to actual conditions.

Developers focusing on different markets also post varying results.

Sunac China Holdings Ltd. (01918.HK), Shimao Property Holdings Ltd. (00813.HK) and Evergrande Real Estate Group Ltd. (03333.HK) are leading the charge with record-high winning bids in recent land auctions in top-tier cities like Beijing, Shanghai and Guangzhou. Their earnings have climbed to new highs this year. Meanwhile, China Resources Land Ltd. (01109.HK) and Metallurgical Corp of China Ltd.’s (01618.HK, 601618.CN) realty unit, which all bet big on small cities, reported less exciting figures amid sluggish destocking and thinning margins.

– Contact the writer at [email protected]



EJ Insight writer

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