Regulators gain ground tackling property frenzy

A potential homebuyer checks out a property project in Hangzhou, Zhejiang province, Dec 17, 2016. [Photo by Long Wei / Asianewsphoto]

BEIJING - Wang Tao, 35, spent all his savings putting downpayments on three apartments in three separate counties in Hebei province, each more than 70 kilometers apart.

Before March, there was no shortage of property speculators like Wang, but as regulators reined in rocketing property prices, markets have since cooled.

In Beijing, a month after the Chinese capital rolled-out over a dozen property market regulations, many real estate agents are on vacation or leaving their jobs.

Starting from March 17, Beijing adopted 12 measures, including higher downpayments for second home buyers and tighter scrutiny of credit and tax payment records.

"If we compare two weeks before and after the policies, the number of people in Beijing who visited their target houses dropped more than 42 percent," said Yang Xianling, head of a research arm with Lianjia, China' s biggest real estate broker chain.

From last September to this April, at least 45 Chinese cities have adopted restrictive measures to contain runaway housing prices a total of 140 times, according to Centaline Property.

Most notably, controls have been intensified in three key regions of the Beijing-Tianjin-Hebei region in northern China, the Yangtze River Delta region in the east and the Pearl River Delta region in the south.

By April, more than 20 cities in the Beijing-Tianjin-Hebei region and nearby areas have restricted housing purchase to tackle property speculation and rising house prices.

Restrictions taking effect

Home buyers readily quote latest the policies to endorse their purchase decisions, including the coordinated development of Beijing-Tianjin-Hebei, moving non-capital functions from Beijing to Hebei, and the promising Xiongan New Area,

"There has never been a golden time like this for 'Huanjing' (surrounding Beijing), so I banked all I have on this land of hope," Wang said.

Massive development plans outside Beijing have driven up housing investment interest. Parents buy houses for children at college. The elderly eye retirement residences, or people make purchases in anticipation of strong gains.

"However, when the property market gets too hot it will hollow out resources for development, much less for industrial restructuring in regions like Beijing-Tianjin-Hebei," said Zhang Dawei, a senior analyst with Centaline Property.

"Strong regulation must be in place to squeeze out the bubble and to make it difficult for those who buy and sell for quick cash," he said.

In Yongqing and Xianghe counties of Hebei, both an hour drive from Beijing, non-locals can only buy one apartment, with a downpayment of at least 50 percent.

"Restrictive measures have taken effect. The number of non-local buyers has been falling," said Li Jianle, deputy director of housing department in Zhuozhou city.

According to Beijing Municipal Commission of Housing and Urban-Rural Development, in the week ending April 16, a total of 651 second-hand homes were sold, an 18.7 percent drop from the week ending March 17, when regulators first took action.

Of the 13 districts in Beijing, property prices have fallen in at least eight of them, according to Lianjia.

Supply-side reform

"Every six to eight months, a new round of tightening measures needs to be adopted. Otherwise, the effects would soon weaken, as demand is still strong," said Zhang Hongwei, chief researcher with Shanghai-based real estate consultant firm Tospur.

Observers have said that besides short-term policies on the demand side, regulators also needed to act on the supply side.

In a bid to stabilize market expectation, Beijing announced plans to increase land supply over the next five years. From 2017 to 2021, Beijing will add 1.5 million more homes, with 500,000 of them for rent.

According to a meeting Tuesday attended by members of the Political Bureau of the Communist Party of China (CPC) Central Committee, a mechanism ensuring the stable and long-term development of the property market will be introduced.

"The basic need for houses should be met, but speculative behavior will be discouraged. The rent market will be further developed," said Zhao Xiuchi, director of land resources and property management department at the Capital University of Economic and Business.