China’s central government will continue to focus on destocking excess houses, especially in lower-tier cities, while implementing city-specific policies to tackle sharp housing price rises in higher-tier cities or cities with low stocks, according to a report released by international rating firm Fitch.
By Oct 6, a total of 19 Chinese cities have rolled out specific policies including higher mortgage downpayments and home purchase restrictions to curb speculative housing purchases in the past week.
Several cities like eastern Chinese cities Hangzhou and Nanjing have introduced price caps in government land auctions to limit home price increases while some have also been putting up land for sale to increase supply in the short to medium term.
These city-specific policies could seek to tame land prices or control demand from investors. Fitch expected China’s central and local governments to continue to introduce or modify policies to cool the overheated property market.
Prices in 100 major Chinese cities rose 14.9 percent in the first nine months of 2016, with August and September seeing record month-on-month growth of more than 2 percent, according to the China Index Academy, a private property research institute.
Fitch expected purchase restrictions to continue in these cities to control demand from speculative investors and give priority to owner-occupiers.
Other cities with strong property demand, low inventory levels, growing populations and rapid increase on housing prices may also introduce home purchase curbs to tame prices, according to Fitch.