LATEST NEWS

Gonna Take You Higher: Panic Buying Cause Home Prices To Rise In China

Fears of government restrictions have seen a surge in last minute buying.

By Jeff Vasishta April 21, 2017

Just when you thought they couldn’t go any higher, China’s home prices rose in the most cities since October. Panic buying to get ahead of government restrictions to curb property purchases is widely thought to be behind the increase, reports Bloomberg.

Not including government housing, new home prices gained in 62 of the 70 cities tracked by the government. It’s up from 56 in February, according to the National Bureau of Statistics. Ironically, the government sanctions, which are being imposed to help ward off a housing bubble, may have inadvertently caused one.

Related: Pavement To Penthouse—The Latest Trend In Office Buildings Can Be Found High In The Sky

“Buying restrictions may lead to some panic buying,” said Yan Yuejin, a Shanghai-based analyst at property data and consulting firm China Real Estate Information Corp.“As more and more curbs nowadays simply rule some buyers ineligible, people will be more active to get a home in case they are barred from the market someday.”

The scope of tougher buying regulations have been widespread. In Beijing, where home prices have increased 0.4 percent, the municipal government raised the downpayment requirements for second home buyers. In Guangzhou a March 30 ruling, to curb flipping, stated that new homes couldn’t be sold for two years. The city also announced tougher scrutiny on home loans to couples that have been recently divorced, which stems from concerns about recent separations to circumvent home ownership restrictions. A smaller city, Lianjiang, ruled that all taxes had to be up to date for prospective property buyers to buy new homes.

On average home prices increased by 0.97 in March from the previous month, according to Fang Holdings Ltd., which tracked data from 100 cities. The beneficiary from buying restrictions in the larger Chinese cities appears to be its smaller cities such as Yancheng, a small city of seven million residents in northeastern Jiangsu province, which experienced a real estate boom in 2016.

Related: The City May Be Forced To Take Over Privately Owned NYC Streets

Even county-level cities like Jurong, next to Nanjing, have seen rapid price growth. These are stats which are bound to please the Chinese government which placed restrictions on tier one and two cities to spread prosperity to smaller cities and encourage migrants from the country to settle there instead of the expensive major conurbations.

The tier system in China is used to classify the country’s 660 cities, according to GDP, political administration and population. Beijing, Shanghai, Guangzhou and Shenzhen are considered to be tier-one, with provincial capitals usually in the second tier and prefecture level capitals in the third.

The government said it is speeding up construction of infrastructure such as intercity subways and making other general improvements to small cities to attract people to stay in the smaller cities as expansion there booms. It has learned its lesson. New construction in these smaller cities such as Kangbashi led to stunningly beautiful modern buildings which have remained empty as workers have shunned them in favor of tier one and two cities, where they are able to find work more readily.

“Cities and districts built without demand or necessity resulted in what some Chinese scholars have termed, literally, ‘walls without markets’,” says William Hurst, political science professor at Northwestern University. “Or what we might translate as uncompleted or hollow cities. Political exigency and investment hysteria trumped economic calculus or consideration of genuine human needs.” The government are hoping their ghost towns may soon come to life.

Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

  • AGORAFY
    Stefano Boeri, the architect mastermind behind the famous plant-covered skyscrapers, is now designing Forest Cities in Liuzhou, China. #ForestCity #China https://goo.gl/PsTUwv
  • AGORAFY
    Auction is the second scheduled in a month for a One57 unit and it could set a NYC foreclosure record. #BillionairesRow #Foreclosures https://goo.gl/NZ3zqD
  • AGORAFY
    Once a couch-surfing website, Airbnb moves on to luxury properties, further disrupting hospitality industry. #Airbnb #Luxury https://goo.gl/7TpLk6
While Other Real Estate Platforms Start Charging Agents $3-Per-Day Exposure Fee, Agorafy Remains Accessible To All
Real Estate searching platform are always finding news ways to diversify their revenues models. Case in point—on Tuesday July 18, Streeteasy, one of New York…
Is Real Estate Crowdfunding The Fix That Urban Housing In America Really Needs?
Saving money for a down payment? One can only hope. Most millennial in their twenties or thirties are mortified that they might never be able…
Brooklyn And Queens’ Real Estate Sub-Markets Continue Their Ascent To The New Heights
So, the sales prices in Brooklyn and Queens hit record highs. Again. Just like they did in December 2016 and at the end of this…
The Economy Of Car Services And Delivery Apps Might Be Making NYC Less Eco-Friendly
Living in an eco-friendly neighborhood is a good thing. And, as it always the case with the good things, it also costs more. High rents…
Building Communities: What The U.S. Developers Should Learn From Soho China
As our world emerges into the new period of globalization and technology, some of the most important by-products of this process are buildings that have…
Five Reasons Why All Entrepreneurs Must Keep Their Eyes On China
It is hard to overestimate the importance of Chinese influence on the modern global economy. Carving out a place in Chinese market and winning over…
Airbnb Up Their Game With A New Luxury Tier Featuring Mansions And Villas
Airbnb is about to seriously up their game. First, the company started testing a new service called Select in an attempt to push accommodation listings…
Will Artificial Intelligence Change Real Estate Industry In The Next Five Years?
Globalization and tech progress are the two forces that are irreversibly changing the world. Robots, machines, artificial intelligence (AI) tools, and, of course, vast amounts…