Local governments across the mainland continue to do their best to stamp out demand for housing this month as at least seven cities in northern, eastern and southern China introduced new regulations restricting home sales transactions in the last week.
The biggest concentration of new measures are in the provinces around Beijing, where a new city plan has kindled hopes of easy profits from property purchases. The clampdown includes restrictions on purchases by non-local buyers and requirements that non-residents hold properties for a minimum two or three before reselling.
The latest barrage of demand-killing moves follows a trend of intensifying government efforts to tamp down rising home prices after Premier Li Keqiang and other senior leaders emphasised the need to ensure housing affordability and reduce the risk of asset bubbles during annual party meetings during March.
On May 15th, Chengde, a third-tier city 230 kilometres north of Beijing, issued new rules requiring non-local buyers to hold their properties for at least two years after receiving the deed, according to an account in Caixin.
On May 22nd, Baoding authorities made the biggest demand cool move yet, putting a 10-year term on home purchases. The city’s requirement that homebuyers hold their properties for at least a decade before selling comes just one week after the housing bureau in the city’s Baigou district had set a five year ownership minimum.
On May 17th, the government of Tangshan announced restrictions on purchases of homes in the city’s Lu’nan and Lubei districts, as well as within the high tech industrial zone. Under the terms of the new regulations, buyers of both new and second-hand housing in these areas of the city must show proof of payment of local taxes or welfare benefit fees for more than one year, in order to eligible to complete the transaction.
The city’s new regulations also boosted downpayment requirements for buyers of second homes, while forbidding mortgages for purchases of homes beyond the second unit per household.
On May 15th, officials in Kaifeng took a different approach to regulating the market, placing restrictions on sales by developers. The new rules from the second-tier city’s government follow after authorities in Xi’an and other cities last month punished developers for selling homes before having completed all paperwork for launching their projects.
Kaifeng now requires that, before beginning presales of housing, developers must prove that they have committed at least 25 percent of the total investment necessary for the entire project. The builders are also now compelled to confirm dates of completion and handover for the project, as well as committing to construction schedules.
The city government’s restrictions also take aim at developers making fat profits on home sales. In Kaifeng, developers planning to sell units at 150 percent or more of the land cost for the project may apply for a presale license after the main structure of a building is completed.
For projects priced at 200 percent or more of the land cost, sales can only be transacted when the homes are completed.
More Than 30 Cities Lock Down Housing Markets
The latest set of restrictions on the housing market mean that at least 30 mainland cities have put in place new regulations on home sales since March, according to a tally by Mingtiandi. The measures all follow an April 1st announcement by China’s Ministry of Housing and Urban-Rural Development and the Ministry of Land and Resources aimed at “strengthening the adjustment and control of housing and land supply management in the near future.”
After the government’s 2016 moves to raise mortgage rates, boost down payments, and restrict sales to local residents failed to prevent double-digit jumps in housing prices in many mainland cities, 2017’s favorite new wrinkle appears to be the term requirements for selling a property.
In addition to the northern China cities specified above, Changsha in Hunan, Wuxi in Jiangsu and Jiaxing in Zhejiang also issued new housing transaction restrictions on May 20th.