China’s central government appears determined to keep its strong grip on the domestic housing market, despite a spate of attempts by local governments to introduce some form loosening in a bid to sustain revenue from land sales.
More than 10 Chinese cities have tried to stimulate their property markets through an array of measures, including subsidies, deed tax exemptions, lower mortgage rates and higher maximum price thresholds. Property transactions are falling while revenues from land sales are shrinking.
“The central government’s stance on the housing market hasn’t changed a bit so far, and local governments ‘fine-tuning’ moves [were driven] purely by their falling revenues, in which case their pressure could be worse than that of developers,” Pan Shiyi, chairman of SOHO China Ltd. (0410.HK), told the Shanghai Securities News.
Even China’s richest city, Shanghai, is feeling the pinch. Local media reported earlier this week that the city would allow people who have held a residency permit for at least 3 years to buy a second home, the first adjustment to measures introduced last year to curb speculation in the local property market.
But the local authorities on Tuesday rushed to reiterate that they would maintain their property curbs.
“The reiteration shows that the local governments are in fear of going against the central government even though they have the intention of secretively loosening their policies,” Credit Suisse Group analyst Jinsong Du told Bloomberg.
“The Shanghai government left the definition of ‘locals’ vague, so they could have a lot of leeway to explain when needed,” Du added.