GF Securities looks at buying restrictions and sees a larger impact than in 2011.
Buying restrictions in 2011 caused sales to drop 16 percent versus 2010, followed by a 7 percent recovery in 2012.
First, the demand for housing was stronger five years ago. GDP growth was faster five years ago, since then the working population has begun to decline, China's demographic dividend has passed.
Secondly, the current cycle is overshooting real demand. Since the rate cuts and RRR cuts at the end 2014, turnover has been strong for 18 consecutive months. At the same time, hot urban housing prices rose rapidly, further exacerbating the repayment burden on mortgage loans. Even without the introduction of regulatory policy, after excessive demand transactions will naturally fall.
Third, current regulations are more precise, cutting off non-resident, investment demand and the credit supplying it.
Fourth, the housing market has narrowed. The 17 cities with buying restrictions accounted for 10 percent of national sales by area in 2011, and 24 percent of total sales. In 2016, these 17 cities account for 20 percent of national sales by area, and 40 percent of total sales. If these 17 cities see sales by area drop 24 percent, they alone will pull reduce national sales by 9 percent.
Also, credit restrictions will not push speculators out of tier-1 and into tier-4 cities.
Analysts do see home prices rising in the medium to long-term as incomes rise.
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