Central Planning to the Max: Buying Restrictions, Selling Restrictions, Now Lotteries

Shanghai breaks ground on a new measure: a housing lottery. Developers already use lotteries when dealing with a supply/demand imbalance, but this would makes it official policy for all cases where demand exceeds supply.

Caijing: 全国楼市调控路径图:限购限售后 公证摇号买新房来袭?
National property market regulation path map: limited purchase after the sale of notarized lottery to buy new house incoming?

Since last year, "9.30", China's top 55 cities have issued a variety of related real estate regulation and control policy more than 160 times, the property market regulation after all levels into the purchase, the limit Loan, limit, limit the sale of the "four times the times." And 4, the introduction of new real estate in Shanghai to be notarized lottery way sales measures in the view of analysts, or other cities to follow up, the property market sales supervision is expected to have more measures introduced.
Reuters: Shanghai steps up supervision of red-hot property market
Shanghai's housing bureau said in a notice that a lottery system to govern new home sales would be introduced. A notary office would handle the lottery to ensure fairness when buyers outnumber available units.

Real estate analysts say the lottery system, though never put in place formally before, has been frequently employed by developers and sales agents to allocate popular new units.

A Shanghai-based employee from a large real estate firm told Reuters the process could be rather opaque as the results could be pre-determined based on connections or even bribes, but the new measures would mainly affect smaller developers.

"The rules are not entirely new, just that they are more refined and detailed. As a large developer we've made sure to do everything by the books," the person said.
On the surface, this is simply a transfer of rights from the seller to buyer. Instead of paying a bribe to the developer, a wealthy buyer would pay a lottery winner for their number (assuming that isn't also made illegal). However, the Caijing article says some developers artificially drive up gray market prices by limiting supply. This rule should increase supply in those cases.

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