The city of Xining in northwestern China became the latest Chinese metropolis to abolish home purchase restrictions this week, as the country continues to struggle with a slowdown in the real estate market.
The capital city of sparsely populated Qinghai province did away with the administrative measures put in place during 2011 despite not seeing any actual decline in prices, according to government figures. Now there will be no limit on the number of homes that an individual can buy, and all distinctions between locals and non-residents will be disregarded, according to the city’s housing security and management bureau, as cited in a Xinhua report.
Formerly locals could own a maximum of two houses and non-locals were limited to one.
In the latest numbers released by China’s National Bureau of Statistics, the average price of housing in Xining still grew by 0.08 percent in July, on a month to month basis, although this was a slight drop from the 0.16 percent growth recorded in June. On an annualised basis, housing prices in the city of 1.1 million people rose 5.4 percent in July.
Removal of Home Purchase Restrictions Has Limited Effect
Whatever hopes the authorities in Xining may have for their latest policy move, the experience of many other cities in China shows that removal of the home purchase restrictions may not do much to rekindle the market. The home purchase restrictions were put in place in larger cities nationwide in the 2010-2011 period to slow rapidly rising housing costs.
According to Xinhua, of the 47 major cities that had the home purchase restrictions in place, more than 85 have now removed them.
(For a complete map of China’s home purchase restriction changes, check out Mingtiandi’s interactive home purchase restriction map).
According to a tally of official announcements by Mingtiandi, after Nanning removed some restrictions in late April, many more cities have followed suit in recent months. In July nine cities announced at least partial removal of the measures, and that number increased to 15 in August. Many more cities are said to have made the policy changes without making announcements concerning removal of the restrictions.
Despite the changes in policy, the Bureau of Statistics’ data showed average home prices sliding 0.9 percent nationwide in July, the third consecutive month of price declines. The bureau’s figures also show that sales in terms of floor area dropped 7.6 percent from January to July, compared to the same period last year.
A private study published by the China Real Estate Index System (CREIS) found that average home prices declined by 0.6 percent across China last month, slowing from the 0.8 percent drop it reported in July.
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