Future Real Estate Policies Should Stabilize Increasing Property Prices, Experts Predict

(YicaiGlobal) Dec. 19 — Houses should be homes, not investments, the Chinese government said this weekend at the Central Economic Work Conference in Beijing. It plans to protect the real estate market from significant inflation.

The conference is an annual event held in December, which sets the country’s annual economic and financial agenda and defines policy trends for the year to come.

Measures the government plans to take include restricting loans to house buyers who see their purchase as only a financial tool; releasing more land holdings to the market in cities with rapidly increasing prices; accelerating the development of small and middle-sized cities and enhancing supervision of the housing market by regulating developers, salespeople and intermediaries, according to the conference report released by state-run news agency Xinhua.

Several real estate sales records were broken during the first 11 months of this year, according to the National Bureau of Statistics. The total floor space sold rose 24.3 percent from last year to almost 1.36 billion square meters, beating the 1.3 billion record set in 2013. Total sales revenue grew 37.5 percent to pass the CNY10 trillion (USD1.44 trillion) mark for the first time, reaching CNY10.25 trillion. Some Chinese cities saw rapid growth in house prices, with an increase of over 50 percent compared with the same time last year.

Sharply rising prices have attracted a lot of investors, who often use loans to fund speculative investments in the property market. To reduce financial risk and restrain asset bubbles, many local governments have released strict purchasing policies that restrict a household to owning no more than two properties. This legislation has led to families divorcing in order to purchase additional properties.

The authorities previously used short-term policies to regulate the market, resulting in fluctuations that matched economic trends. Future policies will be tailored to the city in which they take effect, Zhang Dawei, chief analyst from Centraline Property Agency, told Yicai Global.