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Business / China Development Forum

Easing expected for China's property policies

By Wu Yiyao (China Daily) Updated: 2015-03-07 07:48

Easing expected for China's property policies

Potential homebuyers visit a housing expo in Zhengzhou, Henan province. China will stabilize property market with tailored, market-based policies to guide 'stable and healthy development', Premier Li's Government Work Report said on March 5, 2015. [Provided to China Daily]

Industry insiders anticipate eased policies covering the realty market after the Government Work Report delivered by Premier Li Keqiang on Thursday featured a softer tone on the industry.

The report omitted any mention of "curbing investment and speculative demand", which had appeared in previous reports, and mentioned only "people's demand for housing for personal use and second homes", which was interpreted by market players as a signal of further policy easing and other steps to boost demand.

"We believe the softer tone paves the way for further policy easing, including a cut in the down payment requirement. The government also plans to increase support for government-subsidized housing, including via the purchase of existing housing stock," said Wang Tao, chief economist in China with UBS AG.

China will stabilize property market with tailored, market-based policies to guide "stable and healthy development", the report said.

The market went through tough times last year, with slumping prices and sales in many cities.

According to the National Bureau of Statistics, property investment growth slid to 10.5 percent in 2014 from 19.8 percent in 2013. Slower investment growth and sluggish apartment sales have affected industries ranging from iron ore to banking, and small and medium-sized developers have been under particular pressure.

Developers said that the Government Work Report provided insights that may lead them to seek opportunities in niche markets.

Yang Keng, a member of the National Committee of the Chinese People's Political Consultative Conference and head of a Chengdu-based developer in Sichuan province, said his enterprises have been shifting their focus to apartments with basic fittings such as plumbing, rather than bare shells, for consumers who wish to upgrade.

"I think the current market needs (basic) apartments, not luxurious, spacious houses," he said.

Analysts said the realty market will benefit from the report's guidance in 2015 in various ways.

"There may be further reserve ratio requirement cuts (for banks) by the end of 2015. In first-tier cities such as Shanghai, prices of apartments may climb some 10 percent based on solid demand ... while the prices of large luxury homes may rise between 5 and 8 percent," said Jenny Wu, director and head of residential services in eastern China for DTZ, a property services provider.

Although the government aims to stabilize the market, it may not be willing to end purchase limits in cities such as Beijing and Shanghai.

Meng Jing and Zhao Yinan in Beijing contributed to this story.

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