More property curbs expected amid price rise in smaller cities
As policies adopted by China’s smaller cities to attract and retain young talents are widely reported to have inflated local home prices, analysts forecast a new round of regulation and control on the property market in a bid to crack down on speculation.

New home prices in second and third-tier cities registered higher growth on a monthly basis in April, with Dandong, the largest Chinese border city facing North Korea, and Sanya, the country’s southernmost city in Hainan province leading the price markup, according to data of the National Bureau of Statistics (NBS).

Many second-tier cities across the country are witnessing a rising property market with local housing inventory falling, which are being attributed to aggressive talent policies rolled out by local municipal governments, under which hundreds of thousands of college graduates are granted permanent residency, also called hukou.

It’s widely reported that Beijing and Shanghai have tightened their hukou system among other policies to limit population. Instead, second-tier cities have engaged themselves in a race to attract young talents to settle down by facilitating them to apply for hukou or offering them subsidies to rent or purchase a home.

Tianjin, among several other desperate cities, is a case in point. Tens of thousands of people rushed into the city last week to try their luck immediately after it announced to grant hukou registration to any graduate with a full-time four-year university degree. Boasting half-an-hour’s drive from Beijing and a much lower threshold for college admission, the city’s hukou soon became the most sought-after.

Tianjin is the most recent example. Previously, Xi’an, the capital city of northwest China’s Shaanxi province, spent no more than five months to have 300,000 young and educated people registered as the city’s permanent residents under its talent policies.

Analysts surveyed by the Beijing Morning Post, a daily newspaper, said the extremely low thresholds to give out hukou, with no long-term mechanism in place to retain talents will only lead to speculation in the local housing markets.

Zhang Dawei, the chief analyst of Centaline Property Agency Limited, was quoted as saying that “talent policies in some cities are being used to steer curbs on home purchases.”

Meanwhile, he believes that falling inventories in smaller cities expedited by limitations imposed on first and second-tier cities over the past year also contribute to the ongoing price rise. “Most regions and areas across the nation are now moving into the phase of replenishing housing stocks.”

Changsha, the capital and most populous city of south central China’s Hunan province, was recently reported to be struggling to keep housing in stock, with more cases of property hoarding among local developers being reported.

And homebuyers in Xi’an, the capital of northwest China’s Shaanxi province were reported to have entered a lottery in a bid to gain a right to purchase houses. Xi'an is one of the eight cities that have introduced lottery systems to pick up home buyers. Zhang Dawei noted in most cases, the lottery is for affordable or capped-price housing.

With home prices going up in many cities, China’s central and local governments are predicted to impose even more stringent curbs on the market.

On May 19, the Ministry of Housing and Urban & Rural Development issued notification to continue to implement regulation and control of the housing market, reiterating policies would be as vigorous as always.

Meanwhile, the housing ministry summoned officials of 12 provincial cities to Beijing to make sure they were working to curb home prices. It’s reported that after the reminder, seven cities including Chengdu, Xi’an and Taiyuan had upgraded curbing measures and rolled out even more stringent rules to crack down on speculation.

Based on Centaline Property data, by May 23, 2018, the country had released over 130 policies in a bid to curb home prices since the beginning of the year. Xia Dan, a senior researcher with Bank of Communications, told the Beijing Morning Post that the regulation and control on housing market would surely continue with more intensive policies coming in more cities. 


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