Turn Confirmed: Beijing Loosens Real Estate Regulation

Barely three months after the government launched a rhetorical and regulatory crackdown on the "chaotic" housing market, the first sign of regulatory easing has appeared.

Although it isn't a policy change, the Beijing municipal govertment sold a plot of land without restrictions on the housing sale price for the first time in 2 years.

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On September 29th, the reporter of China Times reported on the website of the Beijing Municipal Bureau of Land Planning that of 17 pre-applied residential plots that were hanged on the same day, for the first time in 2 years one plot had no restrictions on home prices.

The reporter saw on the website of the Municipal Planning Commission that among the 17 plots, 13 were home price restricted plots, 3 were shared property rights plots, and only 1 had no set price limit. The plot is located at No. 0517-L02, Nanyuan Pomegranate, Fengtai District, Beijing. The planned construction area is 63,070 square meters and the starting price is 2.587 billion yuan. The plot will build about 10,440 square meters of public transportation facilities and 300 social parking spaces, and will be equipped with institutional pension facilities, community cultural facilities and post offices.

This is the first time since Beijing adopted the “price limit for land price” policy in October 2016. After 24 months, Beijing has once again seen residential plots that do not qualify the price of commercial housing in the land supply chain.
First-tier cities started tightening early in the cycle and lower-tier cities still haven't matched their policies. If this is a first step toward easing in the top-tier, we should still see lower-tier cities tighten for months yet.

Regulators are always slow moving and behind the curve. In the prior downturns they first lifted restrictions and then swung to stimulus because sentinent shifted. They do the same on the way up. The "chatotic" market and a major crackdown from on high came during the melt-up phase. Sentiment dominates at the extremes in mood. It defies everything thrown at it, leaving policymakers flat-footed because the miss the turn. Beijing is the first city to notice the policy overshoot.

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