The War for Population Loosens Real Estate Restrictions

as the talent standards are getting lower and lower, more people can easily obtain the qualification to buy a house.
Local governments in China are easing real estate restriction through their "talent war" policies. China is aging and the cities that attract the most youthful and productive workers will be the most prosperous in the future. One of the best ways to attract them is with easy home ownership, infrastructure development and overall quality of living. The dividends are immediate. Cities that have loosened housing policies through the "talent war" loophole have the strongest housing markets over the past two years. Seeing this success, every city is implementing "talent" policies while at the same time watering down the rules to cover everyone under the age of 50. If China were to launch a stimulus or monetary easing effort with these loopholes in place, it's almost a guarantee that a new real estate bubble will emerge in the most attractive cities.

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According to statistics from the Central Plains Real Estate Research Center, as of the date of the 2019, there were nearly 30 cities that announced various talent introduction and settlement policies. Throughout the talent policy in recent years, Zhang Dawei, chief analyst of Zhongyuan Real Estate, analyzed that in 2017, the new talent policy was mainly based on a few second-tier cities. In 2018, more than 100 different levels of cities across the country have issued talent policies. By 2019, the talent policy has basically blossomed everywhere, and the cities that have tasted the sweetness continue to increase in size, and the standard of talents has gradually decreased, which has largely begun to become a labor dispute.
Cities that attract population are growing, cities that lose population are shrinking. The battle for population is a battle for raw GDP growth. On the bright side, China isn't crushing its own population with mass immigration to drive down labor costs and drive up real estate costs. Instead, the benefits of this battle are at least accruing to the native population——as long as they live in a growing city.
Xie Yifeng, dean of the China Urban Real Estate Research Institute, told the Zhongxin Jingwei client that the talent policy has been introduced in recent years, which is related to the increasingly fierce economic competition between cities and the property market purchase restriction policy. He said that the cities that introduced the talent and household registration policies were basically consistent with the cities that implemented the policy of restricting purchases and loans, and the numbers were relatively consistent.
The war has reached the point where real estate restrictions are eroded by "talent war" incentives.
After the rise in housing prices since 2016, the first- and second-tier cities and some third- and fourth-tier cities have basically implemented a purchase restriction policy. This policy will not block household registration and foreigners who do not have a certain number of years of social security or tax, and can be said to be a "profit weapon" for the property market to cool down. . However, the introduction of talents and the loosening of household registration in major cities across the country have caused one to bypass the purchase restriction, and as the talent standards are getting lower and lower, more people can easily obtain the qualification to buy a house.
Cities that fight the talent war have the strongest housing markets.
According to the changes in the sales price of commercial residential buildings in 70 large and medium-sized cities in January 2019 issued by the National Bureau of Statistics, the number of new commercial residential buildings in Xi'an increased by 23.5% year-on-year, ranking the top in 70 cities. In September 2018, the number of new commercial residential buildings in Xi'an increased by 6.2%. The increase is ranked first in 70 cities. Zhang Dawei said that from the cities where house prices have risen in the past two years, most of them have issued talent policies. The rise in housing prices in Xi'an has a lot to do with the loose talent introduction policy.

Zhang Dawei believes that the disguised form of talent policy has lowered the threshold for purchase restrictions and pushed talents into the real estate market, which has a tight supply and demand structure, which has brought up expectations. In the past two years, housing prices in many cities in the country have rebounded, especially in some second-tier cities. The most important reason is that the talent new deal has relaxed the purchase restriction policy.

Yan Yuejin, research director of the Yiju Research Center, said that the starting point and feedback of the talent policy are very good, which reduces the cost of talent introduction in many cities and optimizes the talent structure. Although the policy intention is not to relax regulation, but the effect is not much different from relaxation. Some provincial capitals have strict housing purchase policies, and there is a possibility that buyers will drill down on policy loopholes, which in turn will lead to rising house prices.
Analysts go on to discuss how cities can manage housing without passing what amounts to real estate relaxation policies.
Although the talent introduction policy is suspected of disguised relaxation and restriction, Xie Yifeng said that on the one hand, talent introduction and household registration reform have a role in promoting urban development and promoting urbanization. In the downturn of the property market, the market cooling rate has also slowed down, and the property market will not appear. Big ups and downs.

On the other hand, after the introduction of talents, it is also necessary to solve the reasonable living needs of the new citizens. Blindly, across the board, the talent policy will be discounted. Therefore, local governments need to balance the relationship between talent introduction, household registration reform and stable real estate market.

Zhang Dawei said that the talent policy should not be linked to the purchase restriction of the property market. Talents can directly subsidize the purchase of house vouchers and provide talented apartments instead of attracting talents as attracting buyers. Yan Yuejin said that the key is to further subdivide the policy of purchasing talents. For example, after the purchase of a house, the house is not allowed to be transferred at will. After the settlement, it is necessary to pay 6 months of social security to enhance the authenticity of the purchase. Xie Yifeng said that population or talent inflows should increase land supply and increase policy housing supply for affordable housing, shared property housing, public rental housing, and affordable housing to ensure a stable market.

Recently, the official has repeatedly expressed its position on real estate regulation and control. Housing and housing are not speculative, because of urban policies, “stable prices, stable prices, stable expectations” have been repeatedly mentioned. Yan Yuejin analyzed that the “three stables” policy indicates that follow-up control will continue. Although there is a possibility of policy relaxation, there will still be supervision in the financial system and transaction order.
The complication for Beijing is local incentives. Given Chinese fertility rates, every city is at risk of losing population. Every city has an incentive to beggar thy neighbor's population. A slowing economy exacerbates this competition. In a growing economy all cities can prosper, but if growth slows or even worse stagnates, population movement can become a significant portion of GDP growth. If one city is fighting the "talent war", all cities must fight it or risk falling behind. Beijing and Shanghai have announced population caps that remove them from this war, but population mobility is important for economic growth as new industries grow. China has eased the household registration system in recent years to facilitate greater mobility. Despite the central government's wishes, local governments are going to keep fighting this war and ending it risks further weakening the housing market and economic growth.

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