What does Chinese President Xi’s new longevity mean for the country’s property market?

Chinese President Xi Jinping’s new-found ability to stay in his job indefinitely may give him greater scope to pursue his plans to curb rampant speculation in the country’s property market, but he will still face the problem of how to avoid damaging an overall economy heavily dependent on the sector.

In the latter phase of his first five-year presidency, Xi pushed an array of policies that included curbs on home speculators, more land for government-subsidised homes and measures to boost the long underdeveloped leasing market. He has also flagged the idea of imposing a property tax.

His approach was crystallised in a comment he made to a Communist Party meeting last October, that “houses are used for living, not speculation”. The measures introduced so far have kept property price rises in big cities in check, and some analysts argued that being free from the restrictions of having to step down meant that Xi could forge ahead with his plans.

“If you look at the track record, you’ll realise that when Xi says something, he really means it,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia. “In the past 10 years or so the market has lived through cycles of price surges followed by policy curbs that cool the market, and then policy easing and price reflation. Xi means to end that cycle.”

That could potentially mean an end to the relentless price rises that have characterised mainland China’s property market in recent years, with many people effectively unable to own property in many cities. The fact that Xi’s October comment was included in an official document means that his policies would continue, regardless of the new decision on the length of his term in office, said Larry Hu, property analyst at Macquarie Securities.