“China’s property market sees different conditions. Tier 1 cities and certain tier 2 cities have relatively few inventories while tiers 3 and 4 cities still have relatively more inventories. As a result, the government work report in 2017 mentioned more targeted policies on properties”. Zhang Wenlang, chief analyst from Everbright Securities Company Limited (601788.SH) told the Securities Daily.
When arranging the working tasks on properties, the government work report indicated that it will introduce different policies in different cities. Currently, tiers 3 and 4 cities have more inventories and it should support housing purchases by citizens and migrant workers. It will ensure the housing properties of houses, implement the responsibilities of local government and speed up in establishing and improving a long-term mechanism for the stable and healthy de4velopemnt of the property market. The market will play a key role in meeting multi-layered demands and the government will focusing on providing basic guarantees. It will strengthen the classified regulation on the property market. Cities with high pressure on soaring housing prices shall appropriately increase the land for residence and shall regulate the development, sale and agency activities.
“Cutting inventories will remain a key task in 2017. From this perspective, tiers 3 and 4 cities with high inventories will not tighten policies and they may even further loosen policies.” Yan Yue, director of the E-house China R&D Institute, indicated.
Zhang pointed out that due to various reasons, the land supply in certain regions is tight. For example, the land for actual construction in 16 key cities only accounted for about 10 percent of the planned land supply from 2006 to 2010 and no significant improvement was seen in recent years. The government work report pointed out that it is reasonable to establish and improve a long-term mechanism to promote the stable and healthy development of the property market.
Yan believed that it is mentioned in the government work report that cities with high pressure on soaring housing prices shall appropriately increase the land for residence. It is a positive signal meaning that cities with high pressure on soaring housing prices are likely to see active land supplies. Such cities mainly include Beijing, Tianjin, Jinan and other key tiers 1 and 2 cities. Such cities have various migrant workers and will see more land suppliers to release demands for houses. It will introduce different policies in big and small cities on land supply. Big cities will focus on the development of land in outskirts and the development of inventory lands in urban areas while small cities will focus on emerging urban areas. If such cities can actively increase land supplies and control the housing prices, the soaring housing prices can be controlled.
Xie Haoyu, chief analyst on properties from Huatai Securities Co., Ltd. (601688.SH), indicated that properties in tiers 3 and 4 cities will see opportunities in quantity and price. Firstly, the two-way population migration between tiers 1 and 3 cities changed the previous one-way migration, which is the fundamental reason for the opportunities in properties in tiers 3 and 4 cities. Secondly, it mentioned cutting inventories again. Based on the statement on cutting inventories in 2015 and the performance of the property market in 2015 and 2016, the cutting of inventories in tiers 3 and 4 cities is highly expected. Thirdly, certain counties will promote the demand for houses purchase and investment, which will boost the soaring of the quantity and price of properties in tiers 3 and 4 cities.
Translated by Star Zhang
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