China Home-Buying Curbs Set to Stay Despite Nascent Rally

(Bloomberg) --

China’s residential property market may be on the road to recovery but local authorities appear intent on toeing the party line, sticking to President Xi Jinping’s mantra that homes are for living in, not for speculation.

Several local governments have backflipped on policy-easing measures in recent weeks, announcing a loosening of curbs only to reverse the decision within days or sometimes even hours.

Earlier this week, Qingdao, a city in eastern Shandong province, proposed to shorten to two years a rule that said homebuyers can’t sell apartments within five. Three days later, the motion was withdrawn. And last month, Jinan city in the same province said some properties meeting green-building standards were no longer subject to buyer restrictions. The next day, the exemption was reinstated.

Even though real estate is picking up pace as the spread of Covid-19 in China abates, “top policy makers still retain their stance against housing speculation,” said Yan Yuejin, an analyst at E-House China Enterprise Holdings Ltd.’s research institute. “Stronger forms of property easing are still not allowed.”

Home prices in 70 cities monitored by the government rose an average 0.13% in March from February, National Bureau of Statistics data released Thursday showed. New apartment sales also improved in March, recording a narrower decline of 12.1% from a year earlier, separate data Friday showed. Real-estate investment, an important driver for economic growth, expanded from a year earlier after a sharp drop in the first two months of the year.

Local authorities’ reticence to walk back housing-market restrictions is a signal that Beijing also plans to keep a tight rein on the bubble-prone sector, despite China’s economy facing its slowest growth in four decades. In the past, bouts of loosening have led to home-buying frenzies, pushing up prices.

There are some pockets where restrictions have been eased and not reversed. Shanghai and Xi’an, for example, have allowed developers to delay fees for land purchases.

But market watchers say broader policy change is unlikely.

“Local authorities have been reacting fast to cushion the outbreak’s impact on the property market by rolling out some support,” said Danielle Wang, head of China property analysis at DBS Bank (Hong Kong) Ltd. “But it’s clear the top government doesn’t want anything like adrenaline. They’re being very cautious about not overdoing it.”

DateCityPolicy Retreat
Feb. 21Zhumadian, central HenanAnnounced lower downpayment requirements for loans backed by mandatory provident-fund savings. Reversed the next day
Mar. 3Guangzhou, southern GuangdongSaid commercial units converted for residential use no longer subject to home-buying restrictions. Reversed two days later
Mar. 12Baoji, central ShaanxiEncouraged banks to temporarily lower downpayment thresholds for starter homes. Withdrawn hours later
Mar. 15Jinan, eastern ShandongSaid properties meeting green-building standards no longer subject to home-buying restrictions. Reversed the next day
Mar. 24Haining, eastern ZhejiangLocal media reported plans to loosen home-buying restrictions for one month. Post was deleted the next day and authorities said restrictions still in place
Apr. 14Qingdao, eastern ShandongProposed to shorten a home-flipping ban to two years from five. Reversed three days later

©2020 Bloomberg L.P.

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