Shanghai, Shenzhen Clampdown on Housing Market Speculation

Some of China’s biggest and most affluent cities have introduced new administrative measures to stem runaway home prices, after a top banking regulator flagged concerns about a bubble in the

BY Realty Plus
Published - Mar 5, 2021 4:42 AM

Share It

Some of China’s biggest and most affluent cities have introduced new administrative measures to stem runaway home prices, after a top banking regulator flagged concerns about a bubble in the domestic real estate market. Local authorities in Shanghai, Hangzhou and Shenzhen imposed new market curbs on Wednesday, including a ban on flipping homes for a quick profit and more stringent qualification criteria for first-time buyers, according to notices published on their websites. The new measures added to steps over the past few months since authorities in August issued so-called three red lines on corporate leverage in the industry. The move came a day after Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said he was concerned about the bubble in domestic real-estate prices, which could threaten China’s financial sector and economic stability. “Many people buy homes not to live in, but to invest or speculate,” he said, likening the property market leverage to a “grey rhino” risk to the broader economy. “This is very dangerous.” Shanghai, the country’s commercial and financial hub, banned homeowners from reselling their new homes within five years, its housing watchdog said late on 3rd March. There were no restrictions on flipping them previously. Hangzhou, the capital of eastern Zhejiang province and home to some of the nation’s largest fintech groups, on the same day tightened rules on foreclosed homes. It stipulated that buyers must first be qualified to buy a residential home, before they are allowed to transact in such properties. In Shenzhen, new residential projects in the city dubbed China’s Silicon Valley have begun to adopt a points based scoring system to prioritise deserving first-time buyers and push back those already with existing homes. Among others, a person without home ownership or transaction record for more than 10 years in the city will be awarded 40 points, and those without a home but with past transaction history would receive 20 points. People with higher scores would be ahead in the queue for quota.