Narrative Shift: Cities Need to Guard Against Speculative Homebuying

For months, Chinese media and government officials have been saying the shift from a "war for talent" to a "war for population" didn't amount to policy loosening. High-level govt officials stressed that homes are for buying, not living in. Most articles stuck to saying the changes weren't loosening and wouldn't have a major impact on home prices. That is now changing.

iFeng: 各地大力引进人才 “引智”非救市、楼市莫炒作
Sogou Translation: All localities should vigorously introduce talents to "attract talents" instead of rescuing the market or speculating in the real estate market.

Recently, the new policy of introducing talents from all over the country has been upgraded again. For example, Hohhot has proposed that qualified graduates with bachelor's degree or above should be able to buy a house at half price, while talents imported from Ningbo can receive a subsidy of up to 600,000 yuan and a subsidy of 8 million yuan to settle down. Compared with the previous restrictions on settling down in some places, the recent New Deal undoubtedly has more "gold content". However, many people are also worried that from giving accounts to "giving money", will the real estate market be stimulated in disguise?

The importance of introducing high-quality talents to the future development of the city goes without saying. The reason why the "war of introducing talents" is escalating is that forerunners such as Xi 'an, Nanjing and Hefei have already tasted the benefits. Yan Yuejin, director of research at the think tank center of the Easyhouse Research Institute, said that Ningbo's talent policy is the same as the logic of major cities in the country, aiming to actively import high-quality talents to optimize the population structure and boost the level of economic development. The starting point of the recent talent policy is "attracting wisdom" rather than "rescuing the market", which has nothing to do with the property market.

According to the policy issued by Ningbo, besides the introduction of general labor force, it is hoped that the "the drinker's heart is not in the cup" of the policy is to attract high-level talents that can drive the development of enterprises or even industries in a region. For example, the top talents who can receive a subsidy of 8 million yuan for settling down include academicians of both houses of the Chinese Academy of Sciences, Nobel laureates, chief technical officers of the world's top 500 enterprises, etc. According to the data, 48 top talents and 160 leading talents were newly introduced to Ningbo in 2018, both of which achieved double growth.

Although compared with the overall real estate market, the role of high-level talents in promoting housing prices is very limited. However, in the national real estate market "spring", taking out "real money" to attract talents to buy a house and settle down will still make people think. Objectively speaking, relevant policies may stimulate the real estate market transactions, so we should avoid the phenomenon of active housing transactions caused by the talent policy bypassing the restrictions on mergers and acquisitions, and guard against risks such as house price speculation.

Zhang Dawei, chief analyst of Centaline Property Agency, said that housing prices have rebounded in several cities across the country in the past two years. Most of them have issued unprecedented talent policies, which have indeed affected the stability of the real estate market. Especially in some second-tier cities, the rise in house prices has accelerated. One of the reasons is that the talent policy has in disguised form liberalized policies such as purchase restrictions.

According to the usual concept of housing consumption, no matter which level of city, young people are the main group in the rental market. Issuing policies to promote overdraft into the housing market will become a reason for market speculation. For example, Hohhot's current policy will only be implemented within Hohhot Science and Technology City and will not be listed for trading for 5 years. According to the policy, there are very few buyers who truly meet the standards, but for college students who have just graduated within 3 years, they are encouraged to buy houses, which still reveals the local attitude towards the real estate market.

According to the latest March 70 city house price data released by the National Bureau of Statistics, the prices of newly built commercial houses in more than 60 cities rose month on month in March. On April 19, a meeting of the Political Bureau of the CPC Central Committee once again demanded to insist on the position that houses are used for living, not for speculation, and to implement a long-term control mechanism of "one city, one policy, one policy for each city" and the main responsibility of the city government.

Stabilizing the real estate market is not just a matter of words, but also a matter of determination and means. For example, recently Beijing's country fund management policy began to tighten, implementing the "recognize the room Rendezvous" policy for second homes.

As a weather vane, the property market in first-tier cities may affect the whole country. A few days ago, the adjustment of the provident fund policy showed more that Beijing has faithfully implemented the relevant policies of the central government. At the same time, it also shows that local governments can intervene at any time to stabilize market expectations in response to the upsurge of speculation. Moreover, it is necessary to find out early and make moves early, and not to deal with it hastily when it is out of control, which leads to sharp fluctuations in housing prices.