Cities launch new regulations and strict supervision for order, stability, recovery

A growing number of Chinese cities are announcing new regulations to ensure the delivery of property projects to homebuyers and required presale funds are under proper supervision, which is in line with the Chinese leadership's guidance for the sector and expected to boost market confidence and recovery, said industry experts.

Cities like Changsha of Hunan province and Dongguan of Guangdong province have launched new regulations to supervise presale funds of residential properties.

Under their new regulations, down payments will be deposited directly into the supervision account, and the fund will be used for the project construction, thus ensuring the property projects will be completed and delivered in time.

The stricter regulation is in line with the overall guidance that emerged from the latest meeting of the Political Bureau of the Communist Party of China Central Committee on July 28. This measure will boost market expectations, the Securities Times reported.

The meeting called for restoring stability in the real estate market and adherence to the principle of "houses are for living in, not for speculation". Support will be offered to meet the demand for upgraded housing, ensure the completion of houses under construction, and guarantee people's livelihood.

"The stability of the property market is extremely important at the moment, and if the property projects are constructed, completed and delivered in time, the economy will stabilize and recover well, home market confidence and expectations will be improved, and the effect of the market regulation will take shape," said Chen Wenjing, deputy director of research with the China Index Academy.

Confidence is key to a stable property market, especially to the confidence of homebuyers and property developers, said Yu Xiaofen, vice-president of the Zhejiang University of Technology, who is also the dean of the Chinese Academy of Housing and Real Estate at the university, in a chat with Economic Daily.

Yu told the newspaper she expects the home market sales will improve in the second half, and listed reasons like the mortgage rate cut, which allows homebuyers to pay less toward their monthly mortgage payments, and various local measures to support rational demand.

In the past month, sporadic cases of some homebuyers refusing to make mortgage payments due to the delayed deliveries or stalled construction of their presold homes were reported in China.

Zhang Dawei, chief analyst at Centaline Property Agency Ltd, said he believes more local governments will launch measures to get housing projects delivered in time, in order to guarantee market stability. "The home market has withstood its most challenging time, with more and stronger policies targeting timely delivery of presold homes. So, the property sector will speed up recovery."

Abiding by the central government's call for differentiated measures to support the real estate market, more than 210 Chinese cities improved their regulations about 600 times in the first seven months, Chen said, adding more local governments will introduce new measures to boost demand.

"We expect the existing purchase restrictions in second-tier cities to ease off, and the administrative restrictions imposed in many third- and fourth-tier cities will get altered."

Beijing has become one of the latest cities to launch favorable policies for designated residential projects in its suburban districts.

The Beijing Municipal Commission of Housing and Urban-Rural Development announced on Thursday that three land plots located in the districts of Changping and Shunyi are rated as home projects that would provide supporting policies for families with senior people, China.com reported. Families living in the downtown area with senior members aged 60 or above can purchase an apartment from the three home projects with a down payment of as low as 35 percent of the total cost, if they can meet the requirements of the new policy.

"The trial targeting senior people's homebuying demand is a strong signal that Beijing is carefully tweaking policies to support firm demand, and we expect more projects to follow, and such measures will have a positive impact on the local home market," Chen said.