Shanghai Reiterates Property Curbs After Reports of Easing
February 23, 2012, 8:23 PM ESTBy Bloomberg News
(Updates closing share prices starting in fifth paragraph.)
Feb. 23 (Bloomberg) -- Shanghai reiterated its property curbs late yesterday after a state-run newspaper reported that China’s financial center was easing measures to allow a broader pool of people to buy second homes.
Shanghai isn’t changing its housing policies and will continue implementing home-purchase restrictions, Liu Haisheng, the head of the city’s housing authority, said in a statement on its website. Shanghai Securities News, affiliated with state-run Xinhua news agency, said yesterday that the city was loosening its definition of locals to let residence-permit holders with at least three years in the city buy second homes.
“The reiteration shows that the local governments are in fear of going against the central government even though they have the intention of secretively loosening their policies,” said Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG. “The Shanghai government left the definition of ‘locals’ vague, so they could have a lot of leeway to explain when needed.”
Local governments have attempted to ease tightening policies on property even after Premier Wen Jiabao reinstated his stand this year that China won’t waver on its real estate controls and efforts to bring prices down to a reasonable level to ensure fairness and stability. Xiangshan, a county in China’s eastern Zhejiang province, removed home-buying restrictions this year, National Business Daily reported today, citing people from the local property industry association it didn’t identify.
Property Stocks
The gauge tracking property stocks on the Shanghai Composite Index rose 0.5 percent at the close, climbing for a fifth day, the longest stretch of gains since Oct. 28.
Poly Real Estate Group Co., the country’s second-biggest developer, increased 0.2 percent to 11.3 yuan in Shanghai, while Gemdale Corp. added 0.4 percent to 5.67 yuan.
Chinese developers traded in Hong Kong fell. China Overseas Land & Investment Ltd., the biggest Chinese developer listed in Hong Kong, dropped 0.2 percent to HK$16.36, while Country Garden Holdings Ltd. lost 4.1 percent to HK$3.53.
The Shanghai government’s statement came a week after the eastern Chinese city of Wuhu reversed a decision to relax property curbs. The mid-sized city in Anhui province had planned to waive a deed tax and subsidize some purchases on Feb. 9, becoming the first Chinese city this year to signal its intention to ease property measures.
‘Most Critical’
Shanghai was among 40 cities that imposed home purchase restrictions last year. Those considered local residents of Shanghai are allowed to own two homes, while non-locals are limited to one. The policy didn’t specify if residence permit holders would be classified as locals, who are usually recognized as those born in the city or who have worked for an extended period of time, according to Credit Suisse and CIMB-GK Securities Research.
“It is now the most critical stage of the central government’s property controls,” Du said. “It has shown strong determination and will not let go any time soon.”
China’s January new home prices recorded their worst performance in at least a year, with none of the 70 cities monitored by the government posting gains. Shanghai’s housing values fell 0.1 percent in January from December, the fourth month of declines, the statistics bureau said Feb. 18.
--Bonnie Cao. Editors: Linus Chua, Andreea Papuc
To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
