Opposition to Speculation at the Core of Property Control Policies: Central Bank

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The flagship news publication of China’s central bank says the prevention of speculative investment and ensuring that homes are used for owner-occupancy will remain the defining theme of the country’s property control policies.

President Xi Jinping made pointed reference to the problem of speculative property investment during his opening report to the 19th National Chinese Communist Party Congress.

During the speech, Xi reiterated the central government’s position that “homes are for occupation and not speculation.”

Financial News, the official news publication of the People’s Bank of China, has given further elaboration on the government’s position, and indicated that anti-speculation measures will serve as a keystone of Chinese property market control policies going ahead.

“The inclusion of the home-occupancy stance in the 19th National Congress report…will set the basic tone for property market controls, and on this foundation establish long-term control mechanisms for the real-estate sector,” writes Li Wenlong ( 李文龙)

“The conflict between  ‘occupation’ and ‘speculation’ has been a constant disturbance for China’s real estate market…it’s precisely because we haven’t expunged speculative factors that housing prices have surged at an excessive rate, supply and demand relations have been upset, while price signals are malfunctioning.

“Clarification of the stance that housing is for occupation will undoubtedly be of benefit to guiding the real estate market onto a path of healthy, standardised and stable development. Market information will be more transparent, and the laws of the marketplace will be clearer.”

According to Financial News policymakers also hope to transition from heavy-handed price controls to other mechanisms for optimising resource allocation.

“Property market controls will shift from pure control of housing prices to the design of a system that optimises resource allocation,” wrote Li.

“During this new phase of economic development, and with the supplementary help of basic information including uniform registration of fixed property, the property market will establish an effective control system that integrates a top-level design and base level systems, thus raising market efficiency.

“Expunging speculative factors will gradually nourish a rational and mature market environment and consumer awareness, and reduce irrational home purchases.”

Li points out that other measures for improving the health and equity of China’s real estate markets will include social security housing, joint property rights housing, as well as efforts to expand the rental market in urban centres.

 

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