Page 200 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
China, and dropped 8.7 percent over the same expectations with the implementation of relevant
period in 2018. Despite a mild increase in third- policies and through the supervision of the central
tier cities, new home prices in first- and second- authorities and local governments to maintain
tier cities remained steady during the Jan-March price growth at sustainable levels (Wang, China’s
period. Research shows the Chinese home market Real Estate).
is stabilizing under multiple measures, and people’s
home purchasing demands are becoming rational. Investment and Rental Property
However, a Ministry of Housing and Urban-Rural
Development survey sounded an alarm over the China’s fiscal spending on government-
rise in land and property sales in some major cities subsidized housing saw a rapid increase in
in the first quarter. The residential housing market 2018 amid government efforts to curb housing
and the residential land market in some major speculation and improve people’s livelihood. Fiscal
cities have recovered. Both the transaction prices expenditures on government-subsidized housing
for residential properties and the site floor prices projects totaled 737.2 billion yuan (US$107 billion)
for residential land rose moderately. Additionally, that year, up 46.4 percent year-on-year. The funds
the number of high-premium land plots sold helped the renovation of 6.26 million shantytown
increased significantly. The main reason is the units in urban areas and 1.9 million dilapidated
land market has deviated a bit from its historical houses in rural areas, and supported the
average over the course of the past few years and construction of the matching facilities for 300,000
the high performance-price ratio land plots have public rental housing. The Ministry of Finance
led to much developer interest. Local governments vowed to strengthen supervision and management
have been closely watching the land market of the funds for government-subsidized housing in
and home market, and are ready to roll out new 2019, and standardize the financing for shantytown
regulations and controls if the market shows signs renovation projects. The country saw stable housing
of overheating. The policies are likely to continue prices in 2019 amid government control policies
to target individual cities which experience some under the principle of “houses are for living in, not
overheating in order to maintain market price for speculation” (Xinhua, Government-Subsidized).
growth stability. Nationwide policies are unlikely to
be rolled out as the current overall market is stable For example, a few years ago, Shenzhen’s real-
with no obvious rise or fall in prices. The central estate speculators frenetically tried to cash in on the
authorities recognize market discipline, which “villages-in-city”, but now their zeal has dampened
means policies tend to be enforced in the long considerably due various factors, including high
term rather than the short term. The long-term renovation costs, a low return rate, long-standing
mechanism is believed to consider all factors related land shortage and poor regulation. As it grew from
to the home market, including the much-debated a small fishing village into a modern metropolis,
property tax, and it will require a comparatively Shenzhen saw hundreds of villages emerging
long period of time to take form. The industry is inside the city itself in its nearly four decades of
still in the exploiting period in this development, development. The so-called villages-in-city have
and underdevelopment in rental housing will be an been a major source of housing for migrants
important part of this long-term mechanism. More because of the relatively low prices of the homes.
than 200 million people rent their homes in China, These homes form a large part of the city’s rental
and the rental market is valued above 1 trillion yuan. housing market. Since the Shenzhen government
Particularly in first-and second-tier cities, there are made it a priority in 2017 to develop rental housing
large numbers of workers from across the country as a solution to the city’s skyrocketing home prices,
renting their homes. Looking forward, developers some property enterprises have set their sights on
are maintaining a cautious attitude and the whole the millions of units in the villages-in-city, believing
market is still in a state of adjustment. There is a it would be a lucrative business. But now, they have
push-pull mechanism affecting the market. On come to realize it’s not as easy as what they had
one hand, housing developers are focused on land thought initially, and they have begun to adjust their
acquisition to increase sales; on the other hand, strategies accordingly. Industry experts and market
the residential market is fine-tuning price growth analysts said the high cost of renovation, the low
200
China, and dropped 8.7 percent over the same expectations with the implementation of relevant
period in 2018. Despite a mild increase in third- policies and through the supervision of the central
tier cities, new home prices in first- and second- authorities and local governments to maintain
tier cities remained steady during the Jan-March price growth at sustainable levels (Wang, China’s
period. Research shows the Chinese home market Real Estate).
is stabilizing under multiple measures, and people’s
home purchasing demands are becoming rational. Investment and Rental Property
However, a Ministry of Housing and Urban-Rural
Development survey sounded an alarm over the China’s fiscal spending on government-
rise in land and property sales in some major cities subsidized housing saw a rapid increase in
in the first quarter. The residential housing market 2018 amid government efforts to curb housing
and the residential land market in some major speculation and improve people’s livelihood. Fiscal
cities have recovered. Both the transaction prices expenditures on government-subsidized housing
for residential properties and the site floor prices projects totaled 737.2 billion yuan (US$107 billion)
for residential land rose moderately. Additionally, that year, up 46.4 percent year-on-year. The funds
the number of high-premium land plots sold helped the renovation of 6.26 million shantytown
increased significantly. The main reason is the units in urban areas and 1.9 million dilapidated
land market has deviated a bit from its historical houses in rural areas, and supported the
average over the course of the past few years and construction of the matching facilities for 300,000
the high performance-price ratio land plots have public rental housing. The Ministry of Finance
led to much developer interest. Local governments vowed to strengthen supervision and management
have been closely watching the land market of the funds for government-subsidized housing in
and home market, and are ready to roll out new 2019, and standardize the financing for shantytown
regulations and controls if the market shows signs renovation projects. The country saw stable housing
of overheating. The policies are likely to continue prices in 2019 amid government control policies
to target individual cities which experience some under the principle of “houses are for living in, not
overheating in order to maintain market price for speculation” (Xinhua, Government-Subsidized).
growth stability. Nationwide policies are unlikely to
be rolled out as the current overall market is stable For example, a few years ago, Shenzhen’s real-
with no obvious rise or fall in prices. The central estate speculators frenetically tried to cash in on the
authorities recognize market discipline, which “villages-in-city”, but now their zeal has dampened
means policies tend to be enforced in the long considerably due various factors, including high
term rather than the short term. The long-term renovation costs, a low return rate, long-standing
mechanism is believed to consider all factors related land shortage and poor regulation. As it grew from
to the home market, including the much-debated a small fishing village into a modern metropolis,
property tax, and it will require a comparatively Shenzhen saw hundreds of villages emerging
long period of time to take form. The industry is inside the city itself in its nearly four decades of
still in the exploiting period in this development, development. The so-called villages-in-city have
and underdevelopment in rental housing will be an been a major source of housing for migrants
important part of this long-term mechanism. More because of the relatively low prices of the homes.
than 200 million people rent their homes in China, These homes form a large part of the city’s rental
and the rental market is valued above 1 trillion yuan. housing market. Since the Shenzhen government
Particularly in first-and second-tier cities, there are made it a priority in 2017 to develop rental housing
large numbers of workers from across the country as a solution to the city’s skyrocketing home prices,
renting their homes. Looking forward, developers some property enterprises have set their sights on
are maintaining a cautious attitude and the whole the millions of units in the villages-in-city, believing
market is still in a state of adjustment. There is a it would be a lucrative business. But now, they have
push-pull mechanism affecting the market. On come to realize it’s not as easy as what they had
one hand, housing developers are focused on land thought initially, and they have begun to adjust their
acquisition to increase sales; on the other hand, strategies accordingly. Industry experts and market
the residential market is fine-tuning price growth analysts said the high cost of renovation, the low
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