Beijing Intensifies Real Estate Market Controls with Six New Measures

China’s Ministry of Housing and Urban-Rural Development (MOHURD) is stepping up real estate market controls for municipal governments around China with the launch of six new measures.

On 19 May MOHURD once again announced that real estate control targets will remain unchanged and that their intensity will not be relaxed, proposing six new measures for further intensifying control policies.

Since the start of 2018 MOHURD has repeatedly stressed the need to maintain the municipal real estate market controls first launched by local governments in early 2017.

The authority recently convened meetings with 12 of China’s municipal governments to reaffirm the importance of the real estate controls, prompting six cities to ratchet up policies shortly afterwards.

The six new real estate market measures outlined by MOHURD include:

i) Accelerating the formulation and implementation of housing development plans.

Prior to the end of 2018, first-tier and second-tier cities must formulate and complete housing development plans for the period from 2018 to 2022, which will be publicly announced and implemented following submission to the housing department for filing.

Key targets and indices will be included in the regulation of local economic and social development forecast indices.

ii) Adjust the housing and land supply structure.

MOHURD has called for improvements to commercial residential land usage supply methods, the establishment of mechanisms to link building and land prices, and measures to prevent land prices from driving gains in housing prices.

MOHURD will increase the residential building land usage ratio, recommending that residential building land account for no less than 25% of all urban construction land in hot-spot cities.

The authority also wants a large-scale rise in the supply of rental housing and joint property rights housing, to account for at least 50% of all new residential land supply.

iii) Pragmatic strengthening of the regulation and control of funds.

MOHURD pointed to the need to strengthen regulation of the scale of personal home loans, as well as strictly regulate the misappropriation of consumer loans or business loans for leveraged home buying.

Regulators will also be called upon to ensure that enterprises only purchase land using their own funds, as well as strengthen inspections of source of funds used to purchase residential building land and strictly control leveraged land purchases.

iv) Vigorously reorganize and standardise the real estate market.

All local governments will be called upon to strike against illegal and illicit conduct by real estate companies and agencies, as well as strictly inspect and punish “hoarding, speculation, efforts to dodge real estate control policies, and the manufacture of market panics.”

v) Strengthen guidance of public opinion and management of expectations.

MOHURD wants to stabilise market expectations, strengthen interpretations of policies and the openness of market information, as well as promptly clarify misinterpretations of policy and “positively guide public opinion.”

The authority plans to strike against the use of online social media to spread false information or drive housing prices higher.

vi) Further implement a system for holding local government accountable for real estate control policies.

MOHURD will accelerate the establishment of a real estate market assessment and monitoring warning system, in order to improve mechanisms for assessing and evaluating local government real estate control policies.

It will make local governments responsible for stabilising housing prices and controlling rents, as well as hold them accountable for large-scale market fluctuations and inability to achieve control targets.

Yang Hongxu (杨红旭) from the Shanghai E-house Real Estate Research Institute said to Securities Daily that despite the launch of property market controls over a year ago housing prices had continued to rise in some Chinese cities since the start of 2018, and that in some places the gains had been quite large, with no significant cooling of the market.

“The new policies have been released because [regulators] felt that the market was still quite wild after previous discussions with 12 municipal governments.”

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