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Housing consumption to be key economic driver

By WANG YING in Shanghai | China Daily | Updated: 2023-02-13 07:40
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Housing consumption is expected to serve as a key economic stabilizer for local governments this year, as a number of cities and provinces are including promotion of housing consumption in their development plans.

Experts predicted a noticeable recovery of the housing market in the second quarter, with home consumption playing an important role in driving up the economy.

Shanghai said on Jan 29 that it would work this year to strengthen housing demand, meet reasonable financing requirements of property developers and ensure the stable and healthy development of the local real estate market.

Home consumption is regarded as a key driver for economic growth, not only because of the large existing demand for leasing and trading for living rather than speculative purposes, but also for the huge potential throughout the property sector industrial chain, said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center.

On Jan 28, Guangdong province voiced support for housing consumption, including differentiated mortgage policies from city to city and favorable tax measures for owner-occupied homes.

"Upholding the principle that houses are for living in, not for speculation, local governments are taking differentiated measures to release the existing homebuying demand and put a lid on speculative activities at the same time," said Chen Jie, director of Shanghai Jiao Tong University's Center for Housing and Urban-Rural Development.

Liaoning province announced on Jan 27 that it would encourage reasonable housing consumption by such measures as providing equal subsidies and support to homebuyers of new as well as pre-owned homes.

Some cities followed suit. Wuhan, the capital of Hubei province, announced on Feb 6 a package of measures to stabilize its economy, including easing the purchase restriction in the home market by allowing families to buy an extra apartment in the city.

Along with the constant introduction and optimization of policies that aim to boost the virtuous cycle and healthy development of the real estate sector, indexes for property development investment, commercial housing sales and capital for property development are all expected to improve, said Pang Ming, chief economist at JLL China.

Pang said he expects real estate sales to see distinct recovery momentum in the first half of this year, especially in the second quarter.

Li, the researcher at the Guangdong Housing Policy Research Center, said that local governments' decisions have been a good response to the tone-setting annual Central Economic Work Conference in December. The conference emphasized the significance of achieving stable growth in the real estate sector as well as unleashing housing consumption potential.

The meeting also stated that priority would be given to the recovery and expansion of consumption, especially regarding better living conditions, new energy vehicles and elderly care, by raising people's income through multiple channels.

"All the positive elements will effectively support a soft landing of the property market, making the sector a positive contributor to steady investment and economic growth," said Pang.

In Shanghai, transaction volume of pre-owned residential apartments increased 60 percent week-on-week during the first weekend of February, and visits made to homes for sale rose between 30 and 40 percent during the same period, according to Yang Yulei, chief analyst at the Shanghai Lianjia Research Institute.

A similar trend was also seen in Beijing. "I sold two apartments on Saturday alone, and brought four groups of clients to check residential flats on the spot.… In fact, I was too busy to have a whole meal through the weekend," a property agent in the capital city's Fengtai district was quoted as saying by the Securities Times.

Li, the researcher, said, "As home prices in first-tier cities are not falling anymore, a rebound may be felt in the latter part of the first half, with other second- and third-tier cities to follow closely."

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