Policymakers’ ‘misguided’ home-buying limits won’t keep lid on China’s surging property prices: economist
City governments must instead increase land supply to meet demand, says Societe Generale’s chief China economist
City governments are misguided by restricting purchases to contain housing prices, the chief China economist at Societe Generale says.
Kicking some potential buyers out of the market in the name of cracking down on speculation would not keep a lid on housing inflation, Wei Yao, the economist, said. Instead, local governments, the de facto landlords, needed to increase the land supply so that more homes could be built to meet demand, he said.
Beijing was the first city to launch strict measures restricting home purchases, a move it instituted five years ago. A potential buyer with no permanent Beijing residence had to make five consecutive years of local social insurance payments to qualify to buy a flat in the capital.
Dozens of mainland Chinese cities soon brought in similar measures.
