China may ease property curbs in 2019: analysts
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China may ease tight curbs on the property market in 2019, allowing municipal and regional governments to adjust policies to local conditions, reported the Southern Weekly, a Guangzhou-based newspaper, citing a survey of multiple industry analysts and economists.

At the beginning of December, Heze in East China’s Shandong province became the first city to lift limitations on home buying. Soon, some other cities including Zhuhai and Guangzhou in South China followed suit, triggering concerns that a blanket easing of curbs on home purchase may come in the coming year.

At the just-concluded annual Central Economic Work Conference, Chinese policymakers had proposed to “stabilize home prices, land prices and expectations” in comparison with the previous catchword of “resolutely curbing the precipitous rise of home prices.”

“The new directive means efforts to contain market speculation would not end, although across-the-board regulations may be replaced by more tailored measures for different cities and regions,” Zhou Jingkui, economics professor and director of the Real Estate Research Center with the Nankai University, told the Southern Weekly.

The view has been echoed by industry analysts. Zhang Dawei, the chief analyst with Centaline Property, believes the main reason for policy easing in the cities is that home prices have become steady with smaller rises, so there is no reason to ramp up buying restrictions.

The data from the National Bureau of Statistics shows that in the first eleven months of 2018, new home prices in the country’s 70 major cities fluctuated within 1.0 percentage point, and prices of second-hand apartments in 17 cities dipped.

Several other real estate analysts polled by the Southern Weekly agreed the housing markets in China have stabilized, making tight curbs unnecessary. And cities that are taking lead in lifting previous restrictions tend to be more reliant on land sales income.

Heze in Shandong is a case in point. In 2017, land-transfer fees in the city accounted for 117.8 percent of local government’s budget income.

Meanwhile, many local families involved in the massive slum redevelopment program have been compensated enough money to buy new homes. Some big families had planned to purchase several flats to settle down, but limitations on buyers and housing in urban areas became a hindrance.

It’s reported by the Southern Weekly that many families influenced by the shanty town renovation program could only rent temporary places to live, which has pushed up rental prices locally. In some cases, for a country home that could accommodate a family of six, the monthly rental could go beyond 10,000 yuan.

Zhang Dawei said although the Heze case was not quite common, cities that recently lifted home buying limitations were mostly those reliant on land sales or crippled by ill-suited real estate policies.

The prolonged curbs that have been in place for over two years first started in the third quarter (Q3) of 2016, when 19 Chinese cities successively rolled out policies to crack down on rampant property speculation at the time.

In February and March last year, Chinese policymakers put forward and emphasized that houses were “for living, not for speculation”, and the task of “stemming surging home prices in top-tier cities” was highlighted in the year’s government work report, formally ushering in a new round of home buying limitations that were deemed as unprecedentedly harsh.

On March 17, 2017, the Beijing municipal government first announced that down payments for second-time “ordinary home” buyers were raised to 60 percent from 50 percent before, while second-time “non-ordinary home” buyers will have to pay a minimum of 80 percent, up from 70 percent. It’s known homes larger than 144 square meters, or with a price 20 percent higher than government-set guidelines, are defined as “non-ordinary”. In the same month, over 30 cities in China imposed over 38 purchase curbs one after another.

Based on the data from Centaline Property, in 2017, over 270 restrictions were put on home buyers in 110 cities and counties, while from January to the end of November in 2018, over 444 home purchase limitations had been imposed.

Harsh regulations have considerably minimized market fluctuations in a short time. Ou Yangjie, the president of Seazen Holdings, a real estate developer, described in an article that China’s property market had entered a period of “horizontal price movement” with only small ups and downs.

“Without expectations for price rise, speculators would largely retreat from the market, making restrictive policies redundant,” according to the article.

Yang Xianling, president of RealData, a real estate research platform, predicted the policies for the coming year would be moderate, with “no big stimulus or restrictions”, amid a slowing economy and mounting debt pressure. 

 


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