Economic Observation: Many places frequently offer “market stabilization” policies. China’s property market now has two-way regulation

Recently, China's real estate market has seen a rare situation in which two opposite policies of "controlling housing prices" and "stabilizing the property market" appear at the same time.

On the one hand, cities such as Harbin are bailing out real estate companies from the supply side or providing home purchase subsidies to stabilize the property market. On the other hand, cities such as Dongguan have issued reference price policies for second-hand houses to control excessive rise in housing prices.

On October 10, Harbin, a city with a population of tens of millions, introduced 16 measures to stabilize the property market. For example: by slightly relaxing pre-sale conditions and regulatory fund returns, adjusting the land value-added tax pre-collection rate and land transaction price payment time, etc., to reduce the pressure on corporate liquidity. In addition, Harbin provides subsidies for first-time home purchase for talents with a college degree or above and for new citizens. At the same time, it also relaxes the provident fund loan period for second-hand housing.

The release of this policy is directly related to the recent rapid cooling of the property market. Data released by the National Bureau of Statistics show that since April this year, Harbin’s new home prices have continued to fall in a year-on-year range, with the decline widening to 0.6% in August. In September, due to the impact of the epidemic, the property market was completely frozen.

This short-term bailout policy does not mean a comprehensive relaxation or shift in regulation. According to Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, Harbin’s policy focuses on relieving the supply side rather than stimulating the demand side. The design of this policy focuses on tapping potential demand for home purchases and promoting it in coordination with population, industry and urbanization, rather than returning to the old path of simply stimulating the property market.

Industry insiders believe that Harbin’s policies are relatively restrained and not strong, and will not cause violent fluctuations in the property market. Li Yujia also pointed out that as long as the home purchase interest rate does not decrease, the leverage ratio remains unchanged, the loan concentration policy remains unchanged, transaction taxes and fees do not change, and adjustments are made within local jurisdictions, it will not affect the overall situation.

In addition to Harbin, many cities have recently fine-tuned policies related to home purchase. For example: Shenyang recently increased the first-time home purchase subsidy for talents. Currently, cities such as Changchun and Dalian provide housing purchase subsidies. Since September, Zhongshan, Zhaoqing, Zhuhai, Huizhou and other cities have also lowered personal income taxes on second-hand housing transactions.

According to statistics from the Centaline Real Estate Research Center, more than 10 cities including Ezhou, Zhangjiakou, Heze, Yueyang, and Kunming have recently issued "price reduction orders" to limit the decline in housing prices.

Another direction of regulation is still the tightening of targeted policies in hotspot cities. On October 8, Dongguan City released for the first time the reference prices for second-hand housing transactions in 218 active residential areas in the city. This measure is regarded as a "big move" to cool down the second-hand housing market. Previously, many cities including Shenzhen, Ningbo, Shaoxing, etc. have introduced reference prices for second-hand housing transactions.

A report released by 58.com and Anjuke pointed out that more than 10 cities have announced reference prices for second-hand housing, and the control effect has initially appeared. It can be seen from the listing prices of second-hand houses in September that the listing prices in the four cities of Shenzhen, Ningbo, Shaoxing and Guangzhou dropped month-on-month. From January to September, according to statistics from the agency, the popularity of second-hand housing searches in China fell by 10.5% year-on-year. In the third quarter, the popularity of second-hand housing searches fell by 23.8% year-on-year.

Why do two-way regulation of the property market appear at the same time? Li Yujia believes that the current housing price index in 70 cities released by the National Bureau of Statistics is still rising overall. In August, new homes in 59 out of 70 cities increased year-on-year. The development and sales of commercial housing across the country have maintained a double-digit growth trend. From January to August this year, the sales growth rate of commercial housing was as high as nearly 23%. At present, the industry still retains a certain temperature on the demand side and is in the "high balance" stage.

However, the property markets in various regions are highly differentiated and unevenly hot and cold. Especially in recent months, financing has tightened, credit risk incidents have occurred frequently in the real estate industry, the land market in some cities has declined significantly, and the real estate market has cooled rapidly. For cities with weak population absorption capacity, a rapid decline in the property market will cause various risks. Therefore, from the perspective of city-specific policies, moderately smoothing the decline and adjusting expectations have become the choices of some cities.