China Real Estate Solution: Suppress Market Supply, Increase Govt Housing

The bulk of new housing in Shenzhen will be government backed.
iFeng: 京沪深发出同频信号!楼市大变局真的来了
The “Housing Construction Plan” proposes that Shenzhen will add 165,000 new housing units this year.

Among them, the establishment of talented people housing, residential housing and public rental housing about 113,800 sets, accounting for 69.5% of the annual total housing construction;

About 50,000 sets of commodity housing were newly constructed, accounting for 30.5% of the total.
What does this mean?

This shows that Shenzhen's new market-oriented commercial housing will be as scarce as a limited edition of luxury goods.

And if we take this data and compared to the programmatic document released before, "Shenzhen City Construction and Land Utilization" 13th Five-Year Plan, the pattern of the Shenzhen property market has undergone great changes far beyond our imagination.
Will China succeed where other governments fail at affordable housing? The current plan is a recipe for high prices:
First, although the supply of first-tier cities is difficult, from the point of view of the official increase in total supply, as long as they are willing to squeeze, they can still exceed their targets.

Here, the so-called "land scarcity in first-tier cities - scarcity of housing supply - rising housing prices" does not necessarily hold.

Second, under the condition that the government can exceed its overall goal, it deliberately depresses the number of commercial housing and substantially increases the number of affordable housing.

The morals are self-evident, that is, to increase the number of houses in the hands of the government as much as possible. When the local government becomes a big banker in the urban real estate market, the good days for real estate speculators are over.
If Chinese cities build too few homes, they will cause soaring prices and an even worse affordability crisis. If they build too many homes, they could depress the market. Or they'll build more empty homes that sit idly to avoid depressing prices. Since China's real estate market isn't exactly a free market already, the impact may not be too great. It's unlikely to solve more problems than it creates, but from the government's perspective, more problems may be acceptable if it finally stabilizes home prices.

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