Shanghai, Shenzhen lead China’s biggest cities in latest clampdown on housing market speculation after bubble warning
- Shanghai, Shenzhen and Hangzhou have further tightened rules to plug loopholes, dampen speculation after bubble warning
- New rules follow measures since August when state officials began setting leverage thresholds for indebted developers
“Many people buy homes not to live in, but to invest or speculate,” he said, likening the property market leverage to a “grey rhino” risk to the broader economy. “This is very dangerous.”
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Shanghai, the country’s commercial and financial hub, banned homeowners from reselling their new homes within five years, its housing watchdog said late on Wednesday. There were no restrictions on flipping them previously.
Hangzhou, the capital of eastern Zhejiang province and home to some of the nation’s largest fintech groups, on the same day tightened rules on foreclosed homes. It stipulated that buyers must first be qualified to buy a residential home, before they are allowed to transact in such properties.
In the past, buyers who have exhausted their quotas have turned to those homes foreclosed by lenders to skirt ownership restrictions, analysts said.
In Shenzhen, new residential projects in the city dubbed China’s Silicon Valley have begun to adopt a points based scoring system to prioritise deserving first-time buyers and push back those already with existing homes.
Among others, a person without home ownership or transaction record for more than 10 years in the city will be awarded 40 points, and those without a home but with past transaction history would receive 20 points. People with higher scores would be ahead in the queue for quota.
“It is a very clear signal that a battle to curb runaway home prices in major cities has started on a national scale,” said Yan Yuejin, director of the Shanghai-based real estate think tank E-house China R&D Institute. “The government, from the top to local authorities, has been very determined,” he added.
Shanghai, Shenzhen and Hangzhou’s economies were worth a combined 8.24 trillion yuan (US$1.3 trillion), accounting for about 8 per cent of national gross domestic product in 2020, according to government statistics. The three cities recorded home-price appreciation above the national average in 2020, according to a CBRE survey.
Guo of the CBIRC is not the only official to galvanise the latest drive to rein in market excesses. Deputy housing minister Ni Hong also emphasised the matter during a visit to Hangzhou and Wuxi, also in eastern Jiangsu province.
“The central government has highlighted solving home affordability issues in major cities as one of the major tasks,” Ni said, reiterating the state mantra that “homes are for living in, not for speculation”.