appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Summer Zhen

China’s latest round of property tightening measures are not only targeted at pricking the property bubble of smaller cities, but also sending a clear message to these markets – do not expect housing prices to rebound, according to analysts and economists.
Eight second and lower tier cities in China – Chongqing, Nanning, Nanchang, Changsha, Xian, Wuhan, Shijiazhuang and Guiyang – have rolled out stricter housing policies since Friday, where most require homebuyers to hold on for at least two to three years before they can resell any newly purchased flats.
In Shijiazhuang, an industrial hub in northern China, newly purchased flats can only be resold after five years under the new rules.
“The tightening has extended to the lower-tier cities ... as the government wants to convey a strong message to speculators to not expect the market to rebound,” said Liao Qun, China chief economist at Citic Bank International.
“It is determined to get housing prices under control.”
Although prices have been picking up in the eight cities, they have not escalated to form a bubble, according to Liao.
Take Changsha, the provincial capital of Hunan in central China. Liao said the average new home prices there had just exceeded the 10,000 yuan per square metre mark, a relatively low level.
The tightening has extended to the lower-tier cities ... as the government wants to convey a strong message to speculators to not expect the market to rebound
Liao Qun, Citic Bank International
Since late 2016, various major cities across China have adopted a raft of measures ranging from higher mortgage down payments to increased interest rates and price intervention in an attempt to stabilise prices and the property market.
Hong Hao, chief strategist at Bocom International, said previous measures that targeted top-tier cites such as Beijing and Shanghai had forced some of the hot money to find their way into smaller cities, which in turn led to policy tightening expanding to more markets to curb speculation and financial risks.
“The overall mortgage sector has grown too fast, with the average household leverage having already reached nearly 60 per cent,” he said.
With the influx of hot money and a limited new supply due to the government’s destocking efforts in the past two years, there are signs of “panic buying” in some lower-tier cities, warned Alan Jin, property analyst at Mizuho Securities.
The total housing stock in 80 Chinese cities tracked by E-house China R&D Institute dropped 11 per cent year on year to 402 million square metre at the end of July, the lowest level since September 2013.
Jin stressed that policy tightening are necessary in certain mid- and small-sized cities as irrational market sentiments are more actual and serious than reflected through the government monthly data.
In Xian, the capital of northwest China’s Shaanxi Province for example, prices for some new projects had surged 50 per cent in the past year, he said.
The fresh round of tightening comes at a politically sensitive time, ahead of the Communist Party congress next month in which President Xi Jinping is expected to further consolidate his power. It also raised renewed concerns that the government is getting increasingly tougher on the property sector.
But Wang Tao, chief China economist with UBS, said the actual effect of the recent tightening would be mild as Beijing does not intend to see a market crash.
“The ban on reselling will only affect property speculators, not the self-users,” she said.
The government was ensuring the ongoing development of the market, she said, pointing to the example of the mass redevelopment of shanty areas in various cities that have created huge new housing demand.


How China’s growing Reit sector is giving foreign property investors a route back in

Led by China and US borrowing, the world now owes a record US$365 trillion debt: IIF

To increase China’s consumption, boost the nation’s social safety net, IMF director says

Hong Kong developer New World gets nod to spin off K11 Shanghai assets

China property

China’s home price caps in small cities signal to buyers that prices won’t rebound anytime soon

Analysts and economists say that the government’s latest round of tightening measures for second-tier cities are more importantly, to warn speculators against expecting a rebound in prices in the near term. Photo: Xinhua

Pedestrians walk past cranes operating at a construction site in Chongqing, China, on Tuesday, April 12, 2016. The municipality of 30 million people's state-led development approach fueled growth of 11 percent last year, the fastest pace nationwide, with President Xi Jinping praising policy innovations that have included subsidized housing and relaxed residency rules that encourage labor mobility. Photographer: Qilai Shen/Bloomberg ORG XMIT: 645307467

China home prices face upward pressure

Data from National Bureau of Statistics shows prices in the second-hand market surged 12.8 per cent in May from a year earlier. Photo: Xinhua

China home prices pick up pace in January

Residential buildings are seen near a road crossing in Yanjiao, Hebei province, China, in this November 13, 2015 file picture. To match CHINA-PROPERTY/ REUTERS/Jason Lee/Files

Women stand on a pedestrian overpass in front of residential buildings during a hazy day in Shanghai’s Pudong financial area. Photo: Reuters

China home prices to keep rising over next few months, say analysts

Surging home prices have fuelled social discontent on mainland.

Mainland China home prices hit record high last month

Mainland home prices saw a larger than expected year-on-year growth in the first two months of the year.

Property

Hong Kong & China

Business

Companies

China Business

News

China

Economy

China Economy

Money & Wealth

Analysts say the latest round of measures aim to warn speculators against expecting prices to rebound


China home prices

China’s home price caps in small cities signal to buyers that prices won’t rebound anytime soon

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Analysts say the latest round of measures aim to warn speculators against expecting prices to rebound

Analysts say the latest round of measures aim to warn speculators against expecting prices to rebound