They’re falling like dominos. One after another, lower-tier cities are announcing some sort of easing in their property rules as expectations of rising home prices wane and developers offer discounts on projects.
Nanning was the first to blink and officially relax purchase restrictions. Wuxi then went a step further to give incentives – from this month, anybody with a permanent job can get residency if they buy a flat of at least 60 square meters. And now Tongling in Anhui province has come up with a property market promotion plan, offering homebuyer tax incentives amounting to one percent of the property’s value.
China Central Television reported that transaction volumes and prices have fallen across China. Land sales are a crucial part of local public finances and so more regional countermeasures to arrest a property slide are likely.
Numerous upstream and related industries will be at stake if there is a property meltdown. So will growth concerns prompt a national effort to pump up the sector?
That looks very unlikely at the moment. Beijing has worked hard to temper home speculation, and unless the slowdown becomes a serious threat to economic expansion, it’s in China’s long-term interest to see a moderate decline in the home market.
But Beijing has pledged to start work on 7 million affordable homes this year, and such projects will offset partially the fallout from the private-sector slowdown on upstream players such as construction companies and materials suppliers.
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