Shenzhen Housing Authority Addresses Concerns over Speculative Investment by New Migrants
The housing authority for the southern Chinese tech hub of Shenzhen has addressed concerns over speculative property investment by the city’s newcomers.
At a public event held on 28 April Zhang Xuefan (张学凡), head of Shenzhen’s housing and construction department, was asked about the ongoing rise in speculative capital from recently settled residents of the city, and whether the local government would raise conditions for home purchases.
“We have already noticed this,” said Zhang. “Shenzhen’s brand and value has a city has attracted a large population, and the housing problem requires a large-volume solution.”
Zhang said that regulators were giving consideration to requiring that any home buyers in Shenzhen have records showing tax or social welfare payments in the city for at least a year.
Other cities in China currently imposed similar measures. Since 2018 the Hunan province capital of Changsha has required that new residents be employed on a full-time basis for one year in the city, or have a record of continuous income tax or social welfare payment for 24 months, before being allowed to purchase a single house within the municipal jurisdiction.
Savvy property speculators are dodging these restrictions, however, by taking advantage of policies in Chinese cities intended to attract top-tier human capital.
Shenzhen currently allows Chinese citizens with educational qualifications above the full-time college level to obtain residency within the city as long as they satisfy age requirements.
Once source from a Shenzhen real estate agency told 21st Century Business Herald that cash-flush property investors oftentimes send their tertiary-educated children to take up residence in the city to obtain qualifications to purchase local homes.
According to Zhang home purchase qualification restrictions are only a “patching” measure, and regulators have other means at their disposable.
“It’s not that we aren’t concern about the rise in housing prices,” said Zhang. “We are thinking more of means that treat symptoms and cause and of target policies for resolving house price issues.
“Our current policies create space for patches…it’s not that we don’t have measures, we have prepared many different measures.
“For example at the transactional stage, measures for high-price housing including reduced leverage, high interest rates and high-duties, which are differentiated from standard housing.
“At the ownership stage, we subsequently are also considering real estate tax issues. These are all included in policy considerations, it’s just a mater of when to unveil them depending on market conditions.”
Observers have interpreted the release of several housing policies in relation to COVID-19 earlier in 2020 as marking a loosening of Shenzhen’s ongoing property market controls – policies which Chinese municipal governments have implemented at their own discretion since early 2017.
Zhang said that this interpretation is mistake, and that the goal of Shenzhen’s COVID-19 housing policies has been to expand supply, while current controls focus on the demand side.