Housing Inventory Lowered By Jailing Officials

Chiecon: The impact of China’s anticorruption campaign on the real estate market
According to the Chinese broker, looking at the 32 tier two cities (mainly provincial capitals), the 11 cities that lost senior level officials (Party secretary, mayor, etc.) to the antigraft campaign, saw their combined land sales for 2015 plummet year on year by 38%. The remaining tier two cities unaffected by the anticorruption campaign instead experienced a combined land sale increase of 1% year on year.

Thus to April this year, the 11 cities that lost officials experienced annual price increases of 6.3%, versus only 4.5% in the unaffected 21 cities.

In other words, the replacement of senior local officials in the antigraft campaign disrupted local land supply, limiting the supply of new housing, and therefore forced prices up. The broker believes this to be the major factor in controlling local land supply.

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