China’s top leaders first introduced the phrase “houses are for living, not speculation” at their annual economic meeting in December 2016, marking the start of a series of tighter rules on the property market that eventually led to the bursting of the bubble in 2021.
The removal of the slogan from a key policy document in July was seen as a major signal that policymakers will lift some of those restrictions in a bid to shore up the battered industry, which accounts for about a quarter of economic activity.
The number of transactions in major Chinese cities reported a decline. Analysts say it is driven by more fundamental factors than any immediate regulatory concerns.
“Demand for housing may not recover as quickly as markets expect for several reasons: slow growth in household incomes; low confidence in the future; the legacy of unfinished homes; the declining population; the decline in house prices in many cities,” said Ting Lu, chief China economist at Nomura.
Investors may get their first indication of the market’s reaction when official data on property investment and prices for August is released next month.
Since the Communist Party leadership meeting in July, the central city of Zhengzhou and eastern Hangzhou have launched some measures to support the property market, and more such announcements are expected in the coming weeks.
Many property owners told Reuters they either wanted to sell or were in no rush to re-enter a market that had been their main way of accumulating savings. According to them, it is not the restrictions that keep the market low, but doubts about better days for the Chinese economy.
“There is a widespread lack of confidence in the future. The post-pandemic recovery has not lived up to expectations,” said Sophia Chen, an intellectual property lawyer in Shanghai who owns eight properties, mostly in Shanghai, but has not bought real estate since 2018.
At the same time, some younger people looking for their first home are frustrated by the fact that speculators may be welcomed back into the property market – and with it the economy as a whole – potentially preventing further declines in prices to affordable levels.
“I’m worried about the change,” said a 26-year-old pharmaceutical worker surnamed Song, who considered buying property in Beijing before realizing he needed his parents’ support. “My salary is the average for Beijing, but I still can’t afford to buy a house.”
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2023-08-10 18:15:00
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