China Property Expert: Local Govts' Housing Moves Due Politics

--Property Curbs Seen As Having Limited Effect

--Says Local Govts Must Develop Plans to Meet Longer-Term Housing Demand

     BEIJING (MNI) - Local governments must look beyond administrative curbs on

housing prices solely to enhance their political standing with the central

government and enact forward-looking development solutions to meet expected

housing demand in the future, an expert on China's housing market said

Wednesday. 

     The latest round of local government housing control policies are focused

on currying favor with the central government ahead of the Communist Party

Congress that starts Oct. 18 and may have only a limited impact, Li Tie, former

chairman and current chief economist of the cities and small towns reform and

development center under the National Development and Reform Commission told a

forum here.

     A few days after a series of Chinese Tier-2 cities -- including seven

provincial capitals -- issued an array of new policies to control surging home

prices, China's task in balancing the need to increase housing supply against

mounting public pressure over housing prices was the central topic of discussion

at the China Real Estate and Finance Annual Forum 2017.

     "Due to [government pressure] to reduce housing prices, we have taken

actions to implement quotas on home purchases and to restrict mortgages, or even

control the sales percentage of residential homes among overall property sales,"

Li told the forum.

     Extension of waiting-time policies enacted in several cities that prohibit

a house from being sold on the secondary market before a certain time elapses

"to some degree deviates from the real development of the property sector" and

reflects local officials' misguided desire to show they are performing, he said.

     Local governments have dramatically strengthened their housing control

policies since housing prices began to accelerate in 2008, with limited effect,

Li added.

     The reason prices have been rising is rigid demand for first-time home

buyers or better-quality housing from upwardly mobile consumers as well as

demand for investment properties, with the latter fueled by the high returns on

investment in the property sector in recent years, he said. 

     Any reduction in housing price growth using administrative controls is only

"temporary," and cannot stop the market demand in the longer run, he said.

     Housing prices still have room to grow, given China's population growth,

the continued flow of people into big cities and an overall lack of housing

supply, Li said.

     Price growth pressure needs to be eased through an upgrading of city

infrastructure across the country to allow further development, Li stressed.

More land for residential use and more houses should be provided for the market,

he said.

     "It does not necessarily mean that new districts should be built" inside

big cities -- a step many local governments have already taken, Li said. "But

give more power and development room to medium- and small-size cities

surrounding big cities, and let them provide a greater supply of housing to

newly arriving inhabitants, and add new industries [to these cities] to support

new residents."

     At the same forum, Nie Meisheng, founding president of the China Real

Estate Chamber of Commerce, argued that current government housing policies are

not long-term in nature but are temporary measures mainly intended to defend

financial security and curb financial risks.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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