Sunday, February 27, 2011

18 Chinese Cities to Limit Home Purchases

A last ditch effort after every other move has failed. Whether this works depends entirely on municipalities overcoming their penchant for corruption. They are already in deep with developers who are not going to like enforcement of this.

Taming China’s house prices

Non-permanent residents or foreigners can only buy property after showing proof of social security contributions or income tax payments for a year.

Permanent residents who already own two or more properties will not be allowed to buy any more.

Last week, the Beijing municipal government announced stricter regulations for non-permanent residents.

They are banned from buying any homes in the Chinese capital if they have no residence permit or documents showing that they paid social security or income tax for five consecutive years.
The irony certainly is rich. Those darn outsiders driving up prices.

The State Council has also directed local governments to set property price targets in line with local income levels and the targets should be made public by the end of March.
This is going to be fun to watch.

I'm excerpting a lot, but one more:
The guidelines were outlined by the central government a month ago but most local authorities have delayed their implementation.

“Why have more than 80% of the city governments yet to respond?


jesse said...

In BC, where I am, RE blogs are agog about "rich foreigners" driving up prices. This move by China is seen as a positive as it diverts more money to non-Chinese markets.

This will simply be a game of "pass the potato".

It's also funny, as you mention, because it's unclear exactly how much foreigners are increasing the values of properties on average.

GG said...

I hope as part of the autopsy we can learn some of these things. I wish I could see the trigger. Unrest due to inflation? Clawbacks of offshored money?

Back in Van, I've been trying to decide whether yesterday's Vancouver Sun article about our old friend Cam Good had any merit at all, or whether Good ol' Cam was exaggerating beyond all usefulness. If he really sold 500 homes (!) in Jan and Feb to mainlanders, that's definitely enough to drive prices in a good half dozen select neighborhoods in TO and Van.

I hate to link to the article; you can probably find it if you haven't seen it. I was tempted to feature it in a post entitled "What is a Shill?" but I'm in too good of a mood today.

jesse said...

I saw the article briefly but to be honest I think my bird read it before he covered up Good's picture in bird poo.

GG said...

In the end, actors like Cam are just maximizing their returns based on the incentives that have been set by others. Incompetent RE agents and brokers are more than deserving of ridicule, but railing on the "successful" ones is misdirected energy. It's the incentives that need fixing. That and the cartel needs breaking up. But in a bubble this size, even the cartel pales in comparison to banks issuing so much leverage to so many.