Housing speculation to ease

Updated 2016-12-29 10:01:51 Global Times
Average national commercial residential housing price

Average national commercial residential housing price

Cooling measures to have greater effect in 2017: experts

Tightened regulations on the Chinese housing market will further curb speculative activities in 2017 and a long-term mechanism to ensure a healthy market is expected to soon be established, experts said on Wednesday.

The comments were made following a series of cooling measures that have come out in recent months, including tougher home-purchasing regulations, higher down payments and stricter rules governing the capital flowing into housing projects.

Regulators are also mulling new binding measures for asset-management firms that provide financial support for housing projects which may take effect in 16 large- and medium-sized cities including Beijing, Shanghai and South China's Guangdong Province's Guangzhou and Shenzhen, financial news site 21jingji.com reported on Wednesday.

Since the National Day holidays in October, 24 cities have enacted more than 50 cooling policies to tackle the overheated housing market, which is in line with the report from the Central Economic Work Conference, Hui Jianqiang, a research director with real estate information provider BeijingZhongfangyanxie Technology Service, told the Global Times on Wednesday.

"As top officials stressed: 'Houses are built to be inhabited, not for speculation.' Central and local authorities will need to come up with a more sustainable long-term mechanism to prevent housing bubbles," he said.

Overheated markets

From January to November, total investment in the housing market reached 9.3 trillion yuan (.3 trillion), up 6.5 percent. Further, the transaction volume surpassed its highest point from 2013 to 13.58 trillion square meters, representing a year-on-year increase of 24.3 percent, according to an annual report by E-house China R&D Institute on Wednesday.

In addition, the average transaction value of residential properties nationwide was up 10.6 percent to 7,546 yuan per square meter during this period, hitting a new seven-year high.

Several residents in Shenzhen told the Global Times at the beginning of November that they've seen a rapid growth in housing prices. For example, the average price for residential property was growing by about 10,000 to 20,000 yuan every month before the local authorities tightened purchase regulations in September.

Based on fourth quarter housing market data, the cooling measures have begun to take effect, Yan Yuejin, research director of E-house, told the Global Times on Wednesday. "For cities that see rapid increases in prices, more tightened rules are likely to be carried out, which will surely crack down on the speculative activities," he said.

Looking forward

Following the cooling measures, the housing market in first- and second-tier cities is expected to be further affected in 2017, according to a report from Chinese financial services provider CCIC in November. Sales numbers nationwide are predicted to decrease in the first half of 2017, but are likely to rebound in the second half of the year, the report noted.

"This year was marked by speculation, which will be unlikely for 2017," Hui said, noting that the leverage levels will also decline.

As part of the supply-side reform, second- and third-tier cities also face the task of reducing inventory in 2017, as part of the urbanization process, according to Hui. More diversified policies are expected to stabilize the housing market, according to a report by Haitong Securities sent to the Global Times on December 11. While continuing to curb speculative activities by raising the down payment ratio for second homes and evaluating the qualifications of homebuyers, authorities are also likely to enact policies that will ensure a supply of affordable housing projects, the report said.

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