Local Governments Set to Keep Real Estate Controls Tight

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The latest round of legislative conferences held by China’s local governments indicates that real estate controls will continue to remain tight in cities around the country, while municipal authorities will also drive growth in the home leasing market.

In China’s first-tier cities municipal governments are expected to retain strict real estate controls, while second-tier and third-tier cities will subject their own controls to extensive fine-tuning.

Shanghai mayor Ying Yong (应勇), said at the Shanghai 15th People’s Representative Conference that the city would continue to strengthen its real estate market controls in 2018, as well as raise small and medium-sized housing’s share of total supply.

Shanghai will also expand the development of rental homes, expanding supply by 200,000 units via the construction of new properties or the conversion of existing ones.

The Beijing Municipal Commission of Housing and Urban-Rural Development said that it will strengthen the effectiveness of real estate market controls, and crack down on lending for home down payments.

Nanjing’s municipal government has indicated that this year it will further expand its development of rental homes and seek to expand the rental market, as well as optimise the land supply structure by ensuring that land provided by rental homes comprises 30% of all land provided for housing purposes.

The municipal government for Guangzhou recently announced that it would incorporate policies that mandate “equal rights for lessees and purchasers” and the provision of housing to degree holders in the 2018 work arrangements for its department of education.

Yan Yuejin (严跃进), chief director of the Shanghai E-House Real Estate Research Institute said to Securities Daily that the latest announcements by China’s municipal governments had major significance for the central government’s policies to expand the home leasing market.

“Looking at the deepening of leasing policies, although they will first placed on the agenda in 2015, their real comprehensive implementation began in 2017,” said Yan.

“We should note that the trials of home leasing policies in 12 cities in 2017 was only the beginning, and expect that in 2018 trials will continue to expand in scope, and the significance of equal rights for lessees and buyers to gradually increase.”

Zhang Bo (张波), chief analyst at Anjuke, said that policy support for the home leasing market would see it transition from an ancillary role to primary role in the Chinese housing sector.

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