Chinese City Bans Resale of New Homes Until At Least 2023
A city in China’s east has moved to combat property speculation by banning new home owners from reselling their houses for at least three-and-a-half years.
Tangshan, a prefecture-level city east of Beijing, implemented a 42-month resale restriction on Jan. 4 that applies to all newly built homes purchased after that date.
It’s the latest local government effort to rein in property speculation after Beijing gave localities more power to fine-tune their own housing policies, and it comes even as a nationwide economic slowdown sees smaller cities stimulate their property markets to arrest flagging growth.
Tangshan, a city best known for being the site of a devastating earthquake in 1976, has scrambled to keep a lid on prices after its housing market saw relatively quick growth in the second half of 2019. In November, property prices increased 1.9% month-on-month, the fastest out of 70 key cities monitored by China’s National Bureau of Statistics.
Daniel Yao, head of research at property services firm JLL China, told Caixin that the city’s standout price growth has drawn attention and put pressure on the local government.
“Throughout 2019, we’ve seen a few cities such as Wuhan, Guangzhou, Shenzhen and Zhengzhou slightly loosen household registration policies or public housing fund policies to attract talents or support first-time home buyers… while others tightened property curbs as local markets were under ‘overheating’ risk, such as Suzhou.”
He said it is the “new normal” for cities to tailor local policies in order to stabilize their housing markets.
Since 2017, more than 50 cities have introduced resale restrictions on new homes, with Shenzhen introducing a record five-year ban in 2018. But many small cities have seen only tepid trading, which has depressed property developers’ willingness to invest and bled into local economies. Some are now granting subsidies to homebuyers to boost sales.
Once red hot, China’s real estate market reached a turning point in late 2016 after years of rapid growth, as multiple cities tightened property regulations in response to Beijing’s call to curb speculation and rein in soaring home prices, as well as to prevent a property bubble that could trigger turmoil in the country’s financial sector.
According to state-run Economic Daily, the property sector drew in 5.98 trillion yuan ($858 billion) in 2018, accounting for 6.65% of GDP.
Tangshan’s move could help curb speculation, rationalize purchase behavior and regulate the property market, said Yan Yuejin, a researcher with Shanghai-based property research institute E-house China R&D Institute.
Contact reporter Yutong Lu (firstname.lastname@example.org)
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