BOFIT Viikkokatsaus / BOFIT Weekly 2017/21

The rise in housing prices in China's large cities does not appear to have slowed significantly despite restrictions. This year, several dozen cities tightened rules, including limiting the number of apartments one person may own, longer resale times to prevent "flipping" and higher downpayment requirements. The National Bureau of Statistics reports that prices of existing apartments in 70 cities were up on average about 10 % y-o-y in April. Prices were lower on-year in just six cities. In some major metropolises, however, the rise in prices seems to be moderating. April prices were only up 5 % y-o-y in Shenzhen, compared to over 20 % in Beijing and Guangzhou.

Rising prices have boosted the value of apartment sales. In terms of floorspace, the restrictions appear to have been slowing the sales growth as the NBS reports that growth in apartment sales nationally slowed in April to 5 % y-o-y, down from around 30–40 % a year ago. Measured in terms of square metres of liveable floorspace, apartment building starts in the first four months of the year were up 18 % compared to the same period a year earlier. Sales of land use rights increased by 8 % in terms of surface area. The sale of land use rights fell during 2014–2016. The stock of apartments for sale on the market has been shrinking this year.

China's housing rental markets are fairly undeveloped and most of the population owns their own dwelling. Last week, the housing ministry released a draft of legislation concerning property sales and leasing that would improve tenant rights by encouraging longer rental periods, making it more difficult to raise rents during rental agreement period and requiring landlords to give three months notice before termination of the agreement. The proposal is open for comment.