Haikou city imposes fresh housing restrictions, dampens hopes of policy loosening in China’s property market
- City in Hainan province reported greatest growth in home prices last year
- Move comes a day after city lowers age requirements for residents from other provinces
Haikou city in China’s southern Hainan province introduced a fresh round of restrictions on the sale of homes on Wednesday, weeks after three cities on the mainland eased their housing policies amid headwinds.
According to Shanghai Securities News, companies cannot buy homes and only residents who moved to the city before April 22, 2018 can buy more than one home. Official documents also reiterate strict compliance to prices agreed by the government. The Haikou government did not respond to requests for comment.
Easing restrictions at the national level, not city level, will prove effective in boosting China’s property market, say analysts
“The policies are strict and highlight the direction for the stable development of the property market,” said Yan Yuejin, research director at Shanghai-headquartered real estate transaction services provider E-house China R&D Institute. “It may be because the easing in policies of some cities has caused more speculation [that policies will be eased and sales will go up again] in the Hainan and Haikou markets.”
Haikou’s price index reported the highest growth among all mainland China cities last year, up by 23 per cent year on year in November, according to China’s National Bureau of Statistics. The index tracks home price movements in 70 cities every month. The reading for Haikou was also 37.5 per cent higher than in November 2015.
This rapid growth is why Haikou imposed fresh restrictions at a time when the cities of Guangzhou, Zhuhai and Heze have loosened their housing policies. Their policy loosening, in late December last year, has, however, had little impact, according to analysts. Home sales have risen only marginally, and that too only in Guangzhou.
Previously, Hainan residents from other provinces could only buy one home, and homes could only be resold five years after purchase.
The fresh curbs also come a day after Beijing News reported that Haikou had relaxed its age requirement for people looking to move to the city, a move that analysts thought would lead to a loosening of housing policies and stimulate turnover.
E-House’s Yan said the reiteration of existing policies could plug loopholes and was needed when speculation about policy relaxation was rife.
The fresh curbs are targeted at investors who might look to get around existing restrictions by buying homes through companies, said Zhang Dawei, chief analyst at Centaline Property Agency.
“Property markets across the country are still enforcing relatively strict property policies. It is still the principle to have homes for living instead of speculation,” said Zhang. “The heightened regulations in Haikou may imply the possibility of further curbs in other cities, such as Sanya, in Hainan.”
On the other hand, some analysts said the tightening might be signalling the introduction of a new grand plan.
“The curbs may have been imposed to prevent any major changes in the property market when a grand plan like the Xiongan New Area is revealed,” said Lung Siu-fung, analyst at China Merchants Securities International.
Meanwhile, the Haikou government said new residential buildings in the city centres of Haikou and Sanya could not exceed 80 metres in height, which is about 23 floors.
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The height restrictions, also introduced on Wednesday, could further limit home sales in Haikou. Only 812,600 square metres of residential property were sold in Haikou in the first 11 months of 2018, down 76 per cent year on year, according to Centaline.
China’s property market has in recent months cooled thanks to strict restrictions, deleveraging at property developers, rising interest rates and soured sentiment amid the US-China trade war.