To cool down the overheating property market, China has banned the resale of apartments within two to five years of purchase in more than 50 cities.
The restriction was first introduced in April 2017 covering mainly 14 first and second-tier cities. However, the latest round of announcements on September 22 and 25 has extended the regulation to many third tiers or even fourth-tier cities.
As the tiered city system is used to classify Chinese cities so as to formulate and fine-tune economic and political strategies based on local consumer behavior, income level, politics, and local trends. The implementation of home-sale restriction in all four city tiers implies that it is a national strategy in dealing with property bubbles.
While pro-government commentators argued that the policy would force the speculators to leave the property market, others raised doubts about this and warned that the suspension of sale would reduce supply in the market and prevent property values from going down.
Meanwhile, the prominent blogger on economic news Shi Han Bing pointed out in a widely shared blog post that the restriction on home sales is more about safeguarding the country’s financial system:
Stability of real estate and financial system are the top priorities for the party’s leadership ahead of the twice-a-decade Communist Party Congress slated to begin on October 18. In August, a high-ranking official said that the local economy is being undermined by the profiteering schemes of real estate developers. The official added that the threat of a property bubble has “kidnapped” financial institutions.
But netizens responded with pessimism and rage on social media platforms like Weibo. Many believe that the restrictions on property sales would only push prices up and that government officials are reluctant to allow prices to drop.
Hangzhou is one of the first cities that introduced the restriction on home sales in April 2017 and netizens observe that the policy did not have any effect on cooling down the market.
Courtesy of globalvoices.org
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