MNI: China To Lift Rental Hsg In Bid To Stabilize Property Mkt

     BEIJING (MNI) - The Chinese government plans to further develop the rental

housing market next year as it looks to stabilize the overall property market

while at the same time buoying the world's second-largest economy, although

implementation of a long-awaited property tax system remains a distant goal.

     At the annual Central Economic Work Conference, a three-day affair that

ended Wednesday, Chinese President Xi Jinping and Premier Li Keqiang stressed

the need to bolster the country's residential rental property market, especially

the long-term rental market, next year.

     The high-profile meeting gathered senior Chinese officials to hammer out

China's economic development plan next year and is closely monitored by property

market players for signals on where the market may be headed.

     It was the first time that boosting the long-term rental housing market has

been mentioned as a policy prescription at any CEWC, which analysts said

indicates that more supportive policies and programs could be created to advance

the rental market.

     Yang Hongxu, a veteran property analyst and deputy head of E-house Real

Estate Research Institute, told MNI that the policy tone of the CEWC indicated

that the government's property policy and direction next year will be consistent

with the tone it has taken this year. 

     Development of the rental market would redirect demand away from the

housing sales market, Yang said, predicting that it would cut 20% to 30% of

property transactions in around 20 major cities. 

     The CEWC also addressed the need to maintain consistency and stability of

control policies within the property market while further improving the

long-term overall property system to ensure the stable and healthy development

of the sector.

     "It shows that controls on the property market next year would not be

further tightened as large hotspot cities have already seen their property

markets cool," Yang said in an interview with MNI. "But if some lower-tiered

cities' markets heat up, a few tightening policies might emerge."

     Yang also noted that policies could be loosened in cities whose property

markets show sluggishness.

     Yi Xianrong, former director of the financial development office of the

government-backed think thank China Academy of Social Sciences, said the CEWC's

focus on boosting the rental housing sector still ensures momentum for China's

2018 growth, including support from the property sector, although controls on

the sector would continue to weigh on growth within the sector itself to some

degree.

     Although the government has vowed to implement a real estate tax on

residential property as the core of an overhaul of the property tax system,

property tax reform was not mentioned during the CEWC summit, as some market

participants had expected.

     Both Zhang Hongwei, director of the research department at Tospur

Consultancy, a real estate consultancy based in Shanghai, and Yan Yuejin,

director of E-House, said it is still not the right time to push property tax

reform because of the various intertwined interests involved and because it

remains a controversial topic.

     Chinese Finance Minister Xiao Jie said in an article published in the

official People's Daily on Wednesday that legislation regarding a property tax

overhaul would be finished by 2019, and that by 2020 more detailed laws and

principles would also be unveiled.

     Some commentators feel the article is an indication that the government has

reached a consensus on the issue, but Zhang said on a WeChat blog post that

"It's such a rush for Minister Xiao to voice his opinions on the property tax,"

indicating many headwinds still lie ahead for a property tax overhaul.

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

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

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