Housing prices continue to rise in many parts of China, and even third-tier cities are announcing their housing market control policies one after another. Analysis suggests that many local governments are still highly dependent on land finance.
China’s National Bureau of Statistics recently released information on housing prices in 70 large and medium-sized cities in March. 62 cities had higher prices for new homes than in February, and 58 cities had higher prices for medium-sized homes, both more than in February.
CNN reported that the “China Housing Big Data Analysis Report (1Q 2021)” showed that in March, comprehensive house prices in second-tier cities rose 2.5% per month, an increase of 1.6 percentage points over February, with hot second-tier cities such as Ningbo, Dongguan, Hangzhou, Xi’an and Dalian leading the rise.
Over the past four months, policy pressure to regulate house prices has started in first-tier cities and has covered key second-tier cities, with even many county-level areas issuing regulation and control policies. Jiangshan, a county-level city under Quzhou City, Zhejiang Province, and Yiwu and Yongkang under Jinhua, Zhejiang Province, have recently launched their housing market regulation policies.
The newspaper quoted developer Beyoncé as saying that this round of market fire also appeared in other prefecture-level cities and county-level cities in the Yangtze River Delta, Guangdong, Hong Kong and Macao Greater Bay Area and other metropolitan areas.
The Economic Observer takes the example of Jiangshan City, where the average price of a local middle-class house is close to RMB 20,000 per square meter (about one ping NTD 280,000), and with an average local annual salary of only 56,608 yuan, the house price to income ratio reaches 19.25, making it more difficult for Jiangshan City to buy a house than many second-tier cities such as Nanjing, Dongguan and Suzhou.
In addition, the population of Jiangshan City has continued to net outflow in the past three years, but the workers who went out to make money in the big cities returned to their hometowns to buy property, but became the pillar of supporting housing prices.
Analysis also pointed out that Jiangshan City is more dependent on land revenue, and some local civil servants said that many units would be relieved to see news of land sales by the local government at the end of the year: “I’ll have a year-end bonus this year.
In the past 10 years or so, land sales have become the main source of revenue for many cities, and some cities are suffering from serious “land dependency”, CNN reports. According to Gronk’s Big Data, among the 44 major cities it counted, 20 cities will have a “high land finance dependency” of more than 100% in 2020, while 19 major cities will have a land finance dependency of between 50% and 100%.
In the medium to long term, whether housing prices can be controlled depends largely on whether officials can actively supply land, the newspaper said, citing analysis.
Land finance used to support infrastructure construction in hundreds of Chinese cities, but Liu Shouying, dean of the School of Economics at Renmin University of China, believes that as the rate of urbanization declines and the potential problems of the “land for development” model continue to accumulate, the function of land as an engine of economic growth will no longer continue, and a new round of land management system should be The new land management system should be adapted to the transformation of China’s economic development stage.
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