Despite various restrictions on home purchases, property prices in China kept rising in recent years thanks to loose monetary policy.
A top policymaker stressed in December that “housing are for living in, not for speculating on”, suggesting that authorities must take fresh measures to rein in prices.
The comments prompted some local governments to take a fresh look at their policies.
China’s 70-city housing price index was up 10.56 percent in February from the year before, and up 0.33 percent from the previous month.
Beijing recorded a housing price jump of as much as 24.1 percent on year in February, forcing the municipal government to launch nine additional curbing measures in a span of 10 days.
Across China, more than 30 cities, including Hangzhou, Xiamen, Fuzhou, Guiyang, Changzhou, and Changchun, announced new property curbs in March, targeting multiple-home buyers and non-local investors.
Meanwhile, since the beginning of the year, China has started to tighten the monetary policy in the wake of a rate-rise environment in the United States.
Now, with the policy headwinds and tighter liquidity, and given the already high home prices, we can expect that demand from homebuyers would get constrained somewhat in the coming months.
Some buyers may shift to lower-tier cities, where the housing stock is ample and local authorities haven’t imposed property curbs yet.
We have already had reports, for instance, that some migrant workers in Beijing have decided to invest in property in their home towns rather than in the national capital.
If such moves gather momentum, it could help alleviate the housing bubble in top-tier cities to some extent while supporting the growth of property markets in the smaller cities.
This article appeared in the Hong Kong Economic Journal on March 31
Translation by Julie Zhu
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