Rental Growth and Municipal Market Controls Still the Focus for Property Policy in 2018

Chinese state media says that efforts to grow the home rental market as well as contain housing price growth will be the key focal points for real estate policies in 2018.

In 2017 municipal governments around China launched a slew of property control policies in order to contain overheating local markets, leading to sizeable price drops in major cities including Beijing.

Beijing also flagged plans to expand the home leasing market in major cities, in order to help deal with housing supply shortages and contain prices.

According to state-run media these policy settings are on track to continue in 2018, with China Economic Net reporting that “differentiated control policies will maintain their continuity and stability in 2018, and with the expectation that full year transaction volumes will decline, while prices will remain steady, and new building starts and investment see low-to-medium growth.

In addition to municipal real estate control policies, China’s policy to “give buying and leasing equal play will become the main headline affair for 2018, leading to improvements in prospects for the residential home leasing market.”

Recent meetings of the legislative assemblies of Beijing, Shanghai and other major cities have borne out these signals.

Beijing mayor Chen Jining (陈吉宁) said that this year the city would growth the home rental market with a special focus on the long-term rental market, and advance the construction of rental apartments.

Shanghai mayor Ying Yong said that Shanghai would expand the supply of rental apartments, with the construction or conversion of at least 200,000 units.

Liu Hongyu (刘洪玉), professor at the Tsinghua University real estate research department, said to China Economic Net that the development of the home leasing market would be one of the key targets for reform of the residential housing system in 2018, and play a greater role in efforts by Beijing to shore up home supply.

Zhang Dawei, chief analyst with Centaline Property in Beijing, said that leasing measures will be at the core of new real estate policies slated for launch around the time of the meeting of the China’s two national assemblies.

Zhang also notes that real estate market control policies managed to effectively contain housing prices in hot spot cities last year, while maintaining the the sector’s nation-wide vigour.

The current intensity of real estate control policies in first-tier cities such as Beijing, means that there is little likelihood of further heightening in 2018, however, with regulators expected to focus instead on maintaining their stability.

Huang Yu (黄瑜), vice-head of the China Index Academy, expects real estate transactions to continue to decline in 2018, yet prices to remain steady while construction starts and investment post low-to-moderate growth.

“The current adjustment and control cycle will continue to quite a long time, and it is expected that the market will decline in 2018,” said Huang.

“Commercial housing sales floorspace will be impacted by market control policies and the monetary environment, with first-tier city floorspace holding steady, and second-tier floorspace perhaps seeing quite a marked decline.

“Third and fourth-tier cities will also follow second-tier cities in facing downward market pressure after the basic completion of re-stocking.

“Prices will be impacted by the decline in sales, and it is expected that they will remain steady across the year.”

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