A rebel holdout of Chinese lore fires the first salvo against the state’s year-long crackdown on real estate speculation

Heze, a city of 8.3 million residents in Shandong province, has cancelled the three-year reselling ban imposed in 2017 and given the green light for developers to use more of the capital from pre-completion sales

For now, it isn’t clear how long the Heze authorities can hold out against the central government’s year-long campaign to crack down on speculation

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General view of Heze, formerly known as Caozhou, in Shandong province. Photo: People's Government of Heze City

Published: 1:42pm, 19 Dec 2018Updated: 10:18pm, 19 Dec 2018

A small city in eastern China has begun to relax curbs on residential property, becoming the first local authority out of 50 Chinese cities to reverse the central government’s year-long campaign to cap soaring prices and crack down on speculation.

The government of Heze – a fourth-tier city with a population of 8.3 million residents – in Shandong province has cancelled the three-year reselling ban imposed in 2017, and allowed developers to use more capital from their pre-completion sales, according to an announcement circulated by the local authority.

“Heze fired the first salvo for easing property curbs, sending a very strong signal across the nation,” said Yan Yuejin, a research director of E-house R&D China Institute. “More cities like it are likely to follow.”

The easing comes amid slowing sales and a bearish outlook in China’s property market. November’s home sales fell 5.1 from last year, a third monthly decline and a stark contrast to July when sales increased 9.9 per cent. The central government ordered provincial and city-level authorities to suppress speculation in the industry, amid concern that housing affordability could become a hot wire socio-political issue at a time of slowing economic growth. Before the government’s coordinated crackdown, national average housing price had soared 17.6 per cent in 24 months, according to data that tracks 70 cities. The largest cities saw the biggest surges, with Beijing prices soaring 28.4 per cent while Shanghai’s surged 31.7 per cent in 2016.

Infographics: What is a city tier, and how is it assigned in China?

As a result of the curbs, the inventory of unsold housing stock rose 1.7 per cent in November across 64 third- and fourth-tier cities, according to data compiled by E-house.

Heze, which earns about a third of its income from horticulture and the cultivation of peony, was known as Caozhou during the Northern Zhou dynasty (AD557 – 581). It is the scene for the Water Margin, one of China’s four great classical novels, about 108 outlaws who made Liangshan in Caozhou their rebel holdout before forcing the Song dynasty government into an amnesty.

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