Real estate norms may be tightened further

A meeting held by the Political Bureau of the Communist Party of China (CPC) Central Committee on Thursday reiterated that China will adhere to the principle that "houses are for living in, not for speculation". Under the principle, a new round of policy tightening is likely in some cities where home price growth tends to exceed market expectations if the development of housing market is off the right track, experts said.

As Beijing is deeply concerned that a property bubble could be damaging to the real economy and the financial sector, top leaders once again vowed to stick to their tightening stance on the property sector at the Politburo meeting, said Lu Ting, chief China economist at Nomura Securities.

Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution, said:"The latest meeting has made it clear that China will continue to stick to the principle that 'houses are for living in, not for speculation'. Local governments and entities should enforce housing market regulations strictly, rather than taking any chances on relevant policy relaxation."

If land and home price hikes occur later, the government will adopt rigorous measures to regulate the housing market, which should play a better role as an economic stabilizer and provide greater assurance to economic development during China's 14th Five-Year Plan (2021-25) period. The country will continue to crack down on speculation in land and housing markets in the second half of this year, Yan said.

It is also worth noting that during the meeting, top leaders said China will boost investment and consumption demand via new urbanization, to promote institutional innovation of integrated development of city clusters and urban circles, he said.

The government reiterated that it will hold the bottom line of deterring speculation in the housing market, and housing policies will adapt to local conditions in each city. As a result, real estate regulation may tighten in cities where home prices increase beyond market expectations or where irregularities occur, while the regulation is highly likely to remain the way it is in other cities where home price changes are reasonable, said EH Consulting, a think tank specializing in the real estate market.

After economic development restores stability, the monetary policy environment is likely to tighten to some extent, which may lead to tightening of real estate financing once again, EH Consulting said in a report.

Zhou Lanxu and Li Xiang contributed to this story.