China’s home price caps in small cities signal to buyers that prices won’t rebound anytime soon
Analysts say the latest round of measures aim to warn speculators against expecting prices to rebound
China’s latest round of property tightening measures are not only targeted at pricking the property bubble of smaller cities, but also sending a clear message to these markets – do not expect housing prices to rebound, according to analysts and economists.
Eight second and lower tier cities in China – Chongqing, Nanning, Nanchang, Changsha, Xian, Wuhan, Shijiazhuang and Guiyang – have rolled out stricter housing policies since Friday, where most require homebuyers to hold on for at least two to three years before they can resell any newly purchased flats.
In Shijiazhuang, an industrial hub in northern China, newly purchased flats can only be resold after five years under the new rules.
“The tightening has extended to the lower-tier cities ... as the government wants to convey a strong message to speculators to not expect the market to rebound,” said Liao Qun, China chief economist at Citic Bank International.
“It is determined to get housing prices under control.”
Although prices have been picking up in the eight cities, they have not escalated to form a bubble, according to Liao.
