Taizhou City in Zhejiang Province has recently released the "Notice on Further Implementation of Real Estate Market Regulation Work". According to it, restrictions will be imposed on commercial housing purchases, making Taizhou the first second- or third-tier city to implement such restrictions recently.
According to media reports, Wang Juelin, Deputy Director of the Policy Research Center of the Ministry of Housing and Urban-Rural Development (MOHURD), said that MOHURD would not release a specific list of restricted second- and third-tier cities. The restriction policies and measures will be issued by local governments themselves, while MOHURD mainly plays a role in supervision and standard setting.
Analysts believe that many second- and third-tier cities will successively introduce purchase restriction measures in the near future, curbing the momentum of rising housing prices.
Second- and third-tier cities will gradually join in
According to the latest notice issued by Taizhou, families within the city's jurisdictional area and families outside the city’s jurisdictional area who can provide proof of paying individual income tax or social security contributions for more than one year in the city over the past two years from the date of purchase are allowed to buy one new commercial property in the urban area of Taizhou. Families within the city’s jurisdictional area who already own two or more homes in the urban area, families outside the city’s jurisdictional area who already own one or more homes, and families within the city’s jurisdictional area who cannot provide proof of paying individual income tax or social security contributions for more than one year over the past two years will be temporarily suspended from purchasing new commercial properties in the urban area. This restriction policy will take effect on September 1st, with no clear end date specified.
Analysts believe that according to the five criteria for newly restricted cities announced by MOHURD earlier, many second- and third-tier cities will successively introduce similar restriction policies by the end of August.
The research report published by Centaline Property believes that Taizhou is not among the 70 large and medium-sized cities included in the National Bureau of Statistics' housing price statistics. Measured against the previous restriction standards set by MOHURD, its housing price increase is not at the forefront. Many second- and third-tier cities have seen housing price increases exceeding or approaching those in Taizhou, with cities like Luzhou, Nanchong, Yueyang, Dali, Yichang, and Shaoguan seeing much higher price increases than Taizhou. In the future, provinces such as Zhejiang, Guangdong, Jiangsu, and Shandong may even see province-wide prefecture-level cities implementing restrictions altogether.
According to data previously released by the National Bureau of Statistics, in July, among the 70 large and medium-sized cities, only 14 saw a month-on-month decline in new residential housing prices, with some second- and third-tier cities showing significant upward trends. Analysts believe that the expansion of the scope of restricted cities will effectively squeeze out unfair speculative demand and stabilize housing prices in second- and third-tier cities.
Guotai Junan's research report believes that according to MOHURD's previous requirements, the purchase restriction order will be expanded to some second- and third-tier cities in the future, but it is expected not to adopt a one-size-fits-all approach. Increased inventory and financial pressure on developers will make the trend of housing price adjustments more certain.
Chen Cong, chief real estate analyst at CITIC Securities, believes that the scope of price adjustments in the property market in the second half of the year will expand. The price reduction sales in the first half of the year were driven by companies with outstanding cyclical judgment abilities, and future price reductions in the property market will be more comprehensive and widespread, with some small companies with tight funds joining in.
Zhang Yue, chief analyst at Lianjia Real Estate, said that the cumulative effects of previous real estate regulations have gradually become apparent. Unlike the market peak seasons in previous years, this year's 'Golden September and Silver October' may accelerate the squeezing out of the 'bubbles' in the property market.