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By Wanxia Lin
BEIJING (MNI) - Local governments in some Chinese regions are set to ramp
up sales of land to support developers at a time when the economy is struggling
under the impact of coronavirus and to bolster their own finances as the
epidemic pushes up spending, government advisors told MNI.
Regional authorities may also provide financial support for developers, to
ensure they do not run out of funds or fail to complete construction work, said
Qin Hong, director of the Urban Renewal Research Center at the National Academy
of Development and Strategy (NADS) and a former director of the Policy Research
Center at the Ministry of Housing and Urban-Rural Development.
While local administrations have recently moved away from large-scale land
sales to fund short-term spending, increased fiscal transfers from central
government since last year have been insufficient to compensate for the loss of
revenue, leaving them keen to start disposing of property assets again,
according to a research fellow in a think tank who asked to remain anonymous.
Large developers with moderate debt levels, and especially listed
companies, should be willing to buy if more land becomes available, despite the
impact on demand for homes from coronavirus, both advisors said. Medium-sized
developers, seeking growth, should also be in the market, Qin added.
Land markets in first- and second-tier cities should return to activity
from the middle of the second quarter, when the epidemic is expected to ease,
but developers' appetite may be limited in some third- and fourth-tier cities
with high housing stocks, the anonymous source said.
--RELAXING PRICE CEILINGS
So far, at least 10 cities including Wuxi and Shanghai have rolled out
measures to support developers, such as allowing them to delay payment of
land-transferring fees. In the first week after the Chinese New Year Holiday
ending Feb. 14, Beijing municipal government sold six lots of land without
setting home price ceilings in advance, despite the fact that many real estate
companies were still closed due to the virus, said Yan Yuejin, research director
at the Shanghai E-House Real Estate Research Institute.
Relaxing price ceilings will make purchases more attractive for developers,
said Yan, who expects a significant increase in the supply of property after the
Neither advisor expected significant measures to stimulate demand for
housing, with authorities remaining wary of fueling property bubbles and
insisting on their policy stance that "houses are for living in not speculating
Kuang Weida, director of the Urban and Real Estate Research Center at the
NADS, agreed that national measures to boost property demand would be unwise.
But, with demand for housing sapped by economic disruption and loss of income,
authorities in the worst-hit areas may have to consider measures to help buyers,
such as lowering deposit requirements, reducing mortgage interest rates or
cutting taxes, he said, although he added that restrictions on home purchase
aimed at deterring speculation should not be lifted.
Some local governments should be cautious about increasing land supply if
demand is depressed, particularly in areas hit hardest by the virus, Kuang said,
noting that the impact of the epidemic may last a year.
On Feb. 14, Hengyang, a third-tier city close to Wuhan, the epicentre of
the coronavirus, became the first urban area to roll out stimulus to lure
homebuyers, announcing it would waive taxes on purchases.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: firstname.lastname@example.org
--MNI London Bureau; +44 203 865 3829; email: email@example.com
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