Hangzhou, home to China’s new billionaires, gets a dose of property-cooling measures as peak demand looms

Name: China locks down Hangzhou, mega-city far from epicentre of coronavirus outbreak
Uploaded: 2020-09-06T05:00:14.000Z
Duration: 1 min 26 s
Description: China locks down Hangzhou, mega-city far from epicentre of coronavirus outbreak

Municipal government imposes three-year residency rule for parents staying with their children in the city before allowing home purchase

Measures seen as pre-empting excessive speculation ahead of September-October months, the peak season in China’s annual home sales

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People ride a motorcycle through an overpass as cranes stand at buildings under construction in Hangzhou, China, in 2016. Photo: Bloomberg

Pearl Liu

Published: 1:00pm, 6 Sep 2020Updated: 10:54pm, 6 Sep 2020

China has taken another step to plug a hole in its household registration system to prevent excessive speculation in its 16 trillion yuan (US$2.3 trillion) housing market as the economy emerges from a historic slump.

After a pre-emptive strike in Shenzhen in July and Nantong in December, authorities have now tightened the so-called hukou system in Hangzhou in the eastern coastal province of Zhejiang, home to Alibaba and Ant groups and many of the nation’s newly-minted stock market billionaires.

In the latest example, parents joining their children who work in the city must complete three years of local residency before they are allowed to purchase a home, the municipal government said on its official Weibo or Twitter-like account on Friday.

Before the new rule, workers with hukou in Hangzhou were able to gain a quota to purchase a second home for their parents without residency requirement. Some have turned those second purchases into income-generating assets, in cases where their parents only visited for short-term stays.

“Property is still an important driver to the economy and the government will not let it crash,” said Lung Siu Fung, analyst with CCB International Securities. “However, the central government is pretty harsh on allowing no sharp price surge and no heavily indebted developers. Thus, we are seeing more so-called cooling measures.”

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China locks down Hangzhou, mega-city far from epicentre of coronavirus outbreak

The decision suggests Chinese authorities are wary of the threat to its hard-earned post-pandemic economic recovery, without choking the market recovery. The September-October months, which include the golden week holiday, are considered the peak season in home sales for developers.