How is the property price in China

China regulates real estate market

According to Chinese media reports, the real estate market is to be more strictly regulated in 22 cities in China. For this purpose, the allocation of residential building land is restricted. In the future, this should only be allowed in limited batches as part of auctions.

Hong Kong-based equity fund provider JK Capital Management Limited has evaluated local media reports. They indicate that China will regulate its real estate market more in the future. Specifically, 4 tier 1 cities and 18 further tier 2 cities are to limit their building land allocation. To this end, sales are to be made in the context of open auctions in the future. In addition, the authorities do not allow more than three such auctions per year.

The aim is to stabilize the development of real estate prices through increased transparency. Lower property prices would also lead to lower costs for new apartments. However, this effect is likely to be only minor for particularly sought-after areas. After all, the new measure does not help to increase the offer.

Real estate market in China is picking up strongly

The latest figures from the Chinese real estate market show that intervention by the authorities is absolutely necessary. As the South China Morning Post reports, house prices rose 0.36 percent in February, as much as they have in the past six months.

At the same time, the number of home purchases in some cities has tripled compared to the same month last year. However, it must be noted that the corresponding previous year's figure was correspondingly low due to the lockdowns to combat the corona pandemic. However, this was reinforced by the fact that the number of new apartments in some regions had decreased by 63 percent compared to January.

The stability of real estate prices is now the top priority in the People's Republic, which is why Prime Minister Li Keqiang explicitly mentioned it in one of his speeches at the "Two Sessions".

Further measures to stabilize the real estate market in China are tightened controls of the existing regulations. Cities such as Shanghai and Shenzhen, for example, have found that married couples are getting divorced in order to be able to buy more real estate “separately”. One now wants to take stronger action against such arrangements. Other cities, such as Hangzhou, are also putting up additional hurdles for the purchase of second homes.

The result of this increased focus should be a further division of the real estate market in China. In tier 1 cities, price increases are only moderate, while the less strictly regulated tier 2 cities are likely to see a stronger increase.

 

This post is also available in: Simplified Chinese