Idle staff and closed offices: how government curbs hit the property business in one Chinese city
Xianghe in the northern Hebei province was once a darling of property speculators, with prices doubling in less than a year, but after the local government clamped down, the speculators vanished
The main street of the small northern Chinese city of Xianghe in Hebei province, some 50 kilometres southeast of the capital Beijing, bears witness to the battles local authorities throughout the country have been fighting with property speculators.
Lined with the offices of developers and agents, up until just seven months ago it was swamped with people from the capital trying to snap up properties after President Xi Jinping had named the city in 2015 as a key area in plans to integrate the cities of Beijing and Tianjin with parts of Hebei province into a megacity.
Home prices more than doubled in less than a year, as speculators, mostly from Beijing, snapped up properties. The average price of a second-hand home surged to around 23,000 yuan (US$3,464) a square metre by March, up from 12,000 yuan in August 2016 and only 6,000 yuan in 2015.
But the buying frenzy came to a crashing halt in March, when the city government, concerned about a bubble that might damage the local economy, stipulated that non-locals could buy no more than one unit.
Then in May, the Hebei provincial government followed up by banning all non-locals from buying new flats in the areas surrounding Beijing, including Xianghe, unless they could prove they had paid local social insurance for three years.
The result is clear in Xianghe’s main street: nearly half of the property agencies have closed, while in those that remain open, sales people sit idly with no customers.