An announcement dated yesterday on a Jinan city government website indicated that the second tier city in Shandong province will soon join several other Chinese urban centres in revising restrictions on home sales as real estate markets sag across the country.
According to reports in local media, the announcement on the website of the local branch of the Ministry of Housing and Urban-Rural development said that “In order to promote the development of a healthy and stable real estate market in Jinan, the city is considering adjustments in the current approaches to policies on sales of commodity housing.” The statement did not specify how the housing sales policies might be adjusted.
Following Inner Mongolian Example
The proposed policy changes in Jinan follow within a week of the most dramatic liberalisation of homes sales policy yet, in Inner Mongolia’s Hohhot. The capital of the outlying Chinese province, which is said to have an unsold inventory of housing adequate to meet 10 years of current housing demand, announced last Friday that it would allow families to buy new homes without regard to existing holdings of housing stock.
Hohhot’s revision of existing policies followed after several other Chinese cities, including Nanning, Wuhu and Wuxi had adjusted taken the more limited measure of adjusting residency requirements to increase the pool of eligible local buyers, without officially removing the limits on sales per household. Under the rules instituted in most cities non-residents face greater hurdles to purchasing a property.
Jinan, which is the capital of well-off Shandong province has a population of 3 million, more than double the size of Hohhot, and also larger than Wuxi in Jiangsu province – the next largest city to have loosened restrictions on homes sales so far.
A report during May in the official China Securities Journal indicated that China’s central authorities would allow the country’s lower-tier cities to ease policy restrictions on home sales depending on market conditions. If accurate the change in housing sales policy approach would mean that more than 30 second and third tier cities could remove or revise the rules put in place in 2011 to cool down the country’s housing price inflation.
On Thursday, the newspaper Southern Weekly had reported that the central government was allowing cities other than Beijing, Shanghai, Guangzhou and Shenzhen to open up their residential real estate markets
New Rules May Not Be Enough to Jump Start Demand
According to the latest data from China’s National Bureau of Statistics, the average price of new residential housing in Jinan fell 0.4 percent in May, compared to April. While the average price figure was still 5.9 percent more than the average price recorded in May 2013, the decline marked the first month on month fall in prices in June 2012.
In a survey by private real estate research house China Real Estate Index System (CREIS), a division of property website Soufun, pricing for new homes declined an average of 0.5 percent nationwide during June compared to the previous month. Of the 100 cities polled by Soufun, 71 of the communities reported falling prices.