Real Estate

China to fend off bubble risk with tighter property rules

Key Points
  • Beijing says it will stop illegal capital from moving into real estate
  • Investment is to be shared out more evenly to other sectors
  • Cooling measures on property prices appear to be taking effect
A man walks in front of advertisements for residential property in the glass facade of a real estate agency in Guangzhou, Guangdong province of China.
Brent Lewin | Bloomberg | Getty Images

Chinese authorities have said they will head off the risk of a property market crash by stiffening regulation and preventing high land prices.

Regulators from land and housing ministries, as well as the Peoples Bank of China (PBOC), have agreed plans to curb speculation in bricks and mortar, Reuters reported, citing comments on Chinese state television (CCTV).

The authorities said they would stop funds being illegally funneled into property and that capital flow would be more forcibly balanced between real estate and other industries.

CCTV also reported that there would be greater scrutiny of the land market to prevent the underlying cost from pushing up property prices.

China's President Xi Jinping claps after his speech as he and other new Politburo Standing Committee members meet with the press at the Great Hall of the People in Beijing, China October 25, 2017.
Jason Lee | Reuters

The Beijing-based authorities also reminded province leaders to enforce more restrictive lending and make sure building-related regulations were being closely followed.

Beijing has long been fearful that any sudden property crash could restrict wider economic growth and cause social unrest.

Average new home prices in China rose 0.3 percent month-on-month in October, a slight tick-up from a 0.2 percent gain in September. These figures are according to Reuters calculations from China's National Bureau of Statistics (NBS) data released Saturday.

This recent tapering off in price growth suggests that property market cooling measures have begun to take effect.

China property developers remain 'reasonably positive' on 2018
China property developers remain 'reasonably positive' on 2018

Back then, several cities tightened rules for home purchases by increasing the down payment required on real estate buys.

And in October this year, President Xi Jinping signaled that Beijing would continue to manage capital flow into the property market. At the opening of National Congress of the Communist Party of China, which is held every five years, Xi said: "housing is for living in, not for speculation."