Shanghai reiterated its property curbs late yesterday after Shanghai Securities News reported that China’s financial center was easing measures to allow a broader pool of people to buy second homes.
Shanghai isn’t changing its housing policies and will continue implementing home-purchase restrictions, Liu Haisheng, the head of the city’s housing authority, said in a statement on its website. Shanghai Securities News, affiliated with state-run Xinhua news agency, said yesterday that the city was loosening its definition of locals to let residence-permit holders with at least three years in the city buy second homes.
“The reiteration shows that the local governments are in fear of going against the central government even though they have the intention of secretively loosening their policies,” said Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG. “The Shanghai government left the definition of locals vague, so they could have a lot of leeway to explain when needed.”
Local governments have attempted to ease tightening policies on property even after Premier Wen Jiabao reinstated his stand this year that China won’t waver on its real estate controls and efforts to bring prices down to a reasonable level to ensure fairness and stability. Xiangshan, a county in China’s eastern Zhejiang province, removed home-buying restrictions this year, National Business Daily reported today, citing people from the local property industry association it didn’t identify.
The gauge tracking property stocks on the Shanghai Composite Index (SHCOMP) gained 0.6 percent as of 10:22 a.m., extending yesterday’s 2.8 percent rally following the Securities News report. The property measure was also the best-performer among five industry groups on the benchmark index.
The Shanghai government’s statement came a week after the eastern Chinese city of Wuhu reversed a decision to relax property curbs. The mid-sized city in Anhui province had planned to waive a deed tax and subsidize some purchases on Feb. 9, becoming the first Chinese city this year to signal its intention to ease property measures.
Shanghai was among 40 cities that imposed home purchase restrictions last year. Those considered local residents of Shanghai are allowed to own two homes, while non-locals are limited to one. The policy didn’t specify if residence permit holders would be classified as locals, who are usually recognized as those born in the city or who have worked for an extended period of time, according to Credit Suisse and CIMB-GK Securities Research.
“It is now the most critical stage of the central government’s property controls,” Du said. “It has shown strong determination and will not let go any time soon.”
China’s January new home prices recorded their worst performance in at least a year, with none of the 70 cities monitored by the government posting gains. Shanghai’s housing values fell 0.1 percent in January from December, the fourth month of declines, the statistics bureau said Feb. 18.
--Bonnie Cao. Editors: Linus Chua, Andreea PapucLinkedInGoogle +1Print