Eight Chinese cities have unveiled new property curbs recently. The policy focus has further shifted toward restricting re-sale from purchase limitations or tighter mortgages.
It’s estimated that more than 100 Chinese cities above county level have released more than 150 property tightening measures year to date. Of these, Beijing has released over 20 such measures alone, including measures to restrict non-locals from buying properties.
Up to now, 41 Chinese cities have adopted restrictions in housing sales, and the lock-up period ranges from two to 10 years. Twenty-three cities have imposed a re-sale ban for two years, 11 cities set a ban for three years and four cities adopted a ban for five years.
Zhuhai in Guangdong province and Baoding in Hebei province have restricted housing re-sale for up to 10 years in certain districts.
China’s property control measures over the past few years have had little impact. Would this time be different?
Short-term speculators might stay away from the housing market for now. But I believe it may have limited impact on non-speculative buyers.
Some analysts think sales restrictions will reduce supply in the secondary market and indirectly underpin housing prices.
In fact, housing prices in first and second-tier Chinese cities have been spiking in recent years despite continuous property curbs.
In the past, the government relied on demand-side restrictions to cool the market. However, the market usually experiences explosive growth immediately after the government eases such rule.
This time, there is also a possibility that developers may hoard housing inventory to take advantage of a potentially tighter supply.
Since Chinese president Xi Jinping stressed that “houses are for living in, not for speculating with” in a December speech last year, the government has been trying to squeeze out bubble from the housing market and phase out speculators.
Nonetheless, Country Garden (02007.HK), Longfor Properties (00960.HK), China Resources Land (01109.HK) and CIFI Holdings 00884.HK) had completed over 70 percent of their annual sales target as of August.
It shows that the property tightening effort has only accelerated industry consolidation, and big developers are not affected in any negative way.
This article appeared in the Hong Kong Economic Journal on Sept. 27
Translation by Julie Zhu
[Chinese version 中文版]
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