China’s Shandong to scrap urban residency curbs – ET RealEstate

BEIJING: China‘s second most populous province of Shandong will scrap residency rules to ease a move to cities by those living in rural areas, official media said on Thursday, in an effort to boost consumption and unleash a new driver of growth.

The news came just a week after the southern province of Jiangxi became China’s first to entirely free up the limits on city dwelling, saying it would let out-of-towners get urban residency permits.

Now eastern Shandong, which has about 100 million people, plans to free up such curbs and scrap other conditions limiting access to permits in cities, media backed by the provincial government said, citing a briefing by provincial authorities.

They did not give a timeline, however.

China’s urbanisation rate was more than 60% by the end of 2020, official data show.

The new changes are in line with nationwide reforms to gradually scrap household permits in cities, thus narrowing income disparities between the two groups and stimulating private consumption.

Since the 1950s, China has used such permits, known as “hukou”, to control internal migration, to allay government concerns about the sustainability of urban resources.

But the permits have been widely criticised for impeding the movement of labour and widening the divide between urban and rural dwellers. They also limit home ownership and benefits for out-of-towners working in cities.

Economists say relaxing such controls would help ease labour shortages in cities, and an influx of rural workers will bring a boost in urban consumption, particularly through purchases of homes.

About 38.5% of Shandong’s population have rural residency permits, including some who work in its cities, or elsewhere. Its population is eclipsed only by that of the southern province of Guangdong.

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Shenzhen issues draft guidelines to boost supply of rental properties – ET RealEstate

BEIJING: The city of Shenzhen has issued draft guidelines to aimed at increasing the supply of rental properties in China‘s high tech hub.

Land plots will be set aside for builders and existing building will be renovated to make them suitable for rental homes, the housing authorities said on its website on Monday.

The city will also gradually grant tenants and homeowners equal rights to public services including access to residential permits and education.

The move comes as a wave of real estate buying in China’s biggest cities has pushed up prices, prompting local authorities to take steps to rein in the market.

The Shenzhen government also said it will strengthen supervision on rental income and deposits collected by home leasing companies to prevent financial risks from the misuse of funds or illegal withholding of deposits by those platforms.

Separately, Beijing on Tuesday also said it will impose tighter regulations on home leasing firms, in a bid to curb financial risks in the sector following a slew of forced evictions due to financial distress.

In December, China’s top leaders vowed to focus on the development of rental housing markets to help solve a housing problem in big cities, where home prices remain elevated.

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Growth in China’s home prices to cool in 2021, sales flat – ET RealEstate

BEIJING: China‘s home prices are expected to rise at a slower pace this year while sales will likely remain steady, as Beijing shifts its focus to tackling rising debt risks in the sector as the economy recovers, a Reuters poll showed.

The residential property market recovered quickly in 2020 benefiting from lower mortgage interest rates and a marginal relaxation of some official curbs on buyers, offering much-needed support for an economy nearly fully recovered to pre-coronavirus levels. But the rebound has raised concerns about financial risk and policymakers have since then tightened screws on the funnelling of funds into the sector.

Average residential property price growth is estimated to cool to 3.3% in 2021, according to 13 analysts and economists surveyed from Jan. 25-29.

Home prices climbed around 4.9% in 2020, a Reuters calculation of official data showed.

The price rises this year will continue to be driven by bigger cities as the credit liquidity released during the COVID-19 epidemic cannot be recalled in the short term, said Nie Wen, economist at Hwabao Trust.

Sluggish demand in smaller cities and stringent lending regulations for developers and buyers, however, will put a lid on any spurt in demand this year, analysts say.

Property transactions are expected to be flat from last year, versus a 2.6% gain in 2020.

Zhao Ke, analyst at China Merchants Securities, said pent-up buying in the second half of 2020 could mean that demand won’t be as strong this year.

Yuan Hao, chief real estate analyst with SWS Research also expected the central bank’s tight controls on banks’ property loan issuance to curb home transactions this year.

Regulators outlined borrowing caps known as “the three red lines” last August, while the central bank in December introduced caps on property loans granted by banks.

Major Chinese cities including Beijing, Shanghai and Shenzhen also recently ramped up transaction restrictions and launched probes into illegal flows of funds into the real estate sector.

Housing investments are estimated to rise 6.4% this year, slightly softer than the pace of 7% in 2020.

“The volume of new construction starts is expected to stay elevated this year, as land sales in 2020 remained high,” said Nelson Wong, head of research for Greater China at commercial property services provider JLL.

Housing project construction investment will also be driven by developers who are accelerating project launches to raise cash amid tight financing conditions, he said. However, land purchase, the other component of real estate investment, is likely to slow down due to the tight financing situation.

The survey also found analysts think the COVID-19 epidemic will have a limited impact on China’s property sector, and many believe the market will remain stable or further cool this year.

Most respondents say top-tier cities may extend tightening curbs to avoid market froth due to a low level of residential housing supply, while lower-tier cities facing a slump in demand may roll out more support.

Asked to rate the affordability of Chinese housing on a scale, with 1 being the cheapest and 10 the most expensive, analysts’ median answer was 7, in line with the last poll.

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Prices of new homes in China slows in December: Survey – ET RealEstate

BEIJING: Prices of new homes in China rose at a slower pace in December, with tightening policies continuing to cool the market, a private survey showed on Friday, but price growth in 2020 still topped the previous year’s pace despite the coronavirus pandemic.

New home prices in 100 cities rose 0.25% in December from a month earlier versus a 0.32% gain in November, moderating for the second straight month, according to data from China Index Academy (CIA), one of the country’s largest independent real estate research firms.

More cities reported monthly gains, however, with the number climbing to 79 from 71 in November, and 19 cities saw lower home prices compared with 28 in the preceding month, the CIA data showed.

Dongguan and Guangzhou, two cities in the southern Greater Bay Area, led the price rises. While central and northern cities like Luoyang and Zhangjiakou saw the biggest monthly price drops.

“With the government’s market-cooling steps taking hold, the overall price gains remained on a mild level,” said Cao Jingjing, Research Director with CIA.

“The cooling growth is also weighed by deepening price drops in some smaller cities which saw a withered local economy and continued population outflow.”

On an annual basis, new home prices rose 3.46% in December, versus November’s 3.63% gain.

For the whole year of 2020, new home prices rose 3.46%, slightly more than 3.34% seen in 2019, the CIA data showed.

China’s property market has recovered quickly from the COVID-19 pandemic early last year, thanks to cheaper credit and looser purchase restrictions.

But with the economy nearly fully recovered to pre-coronavirus levels, policymakers have been turning their attention back to containing financial risks in the highly leveraged sector, ramping up scrutiny of financing activities of developers and buyers.

Land sales by volume rose 7% in 2020 from 2019, while the average transaction price per square metre rose 7% last year,buoyed by double-digit growth of land prices in tier-1 cities, separate CIA data showed.

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