新政定调楼市去库存

One of the main economic tasks for China in 2016 is house destocking. The government has been stepping up efforts to slash the mounting housing inventory, especially in third- and fourth-tier cities.  Farmers and migrant workers could be the biggest beneficiaries.

While home sales in first and second tier cities are recovering nicely, third and fourth tier cities are telling a different story, however.

Small cities have high housing stocks due to over-building and insufficient demand. The huge inventory in lower-tiered cities is of great importance, as property investment there accounts for 70% of the nationwide total.

"The land fever in third and fourth tier cities between 2009 and 2010 created enough supply to last for the next six or seven years," said Zhang Huadong, Director, E&H China.

"In several lower tier cities the governments are saying they're not going to free up any more land, and of course that is beginning to help with situation."

Rapid urbanization has accelerated real estate investment around the country and the resulting property development has been a foundation for GDP growth for the past decade.

Developers have flooded into emerging cities and built up millions of houses within just few years, without thinking about the whole picture.

The city of Ordos, in the inner Mongolia autonomous region and surrounded by nothing but grasslands, is one example of a so-called ghost city.

Industrial underdevelopment and lack of population has left a high inventory of unsold homes. Besides a lack of industrial stimulus, there are other reasons affecting the demand side.

"The insufficient demand for lower tiered cities results from unbalanced fiscal income, and so there exists a lack of medical services, education and public services. De-stocking would be one suggestion, but on the other hand, it is a process of improving social education and medical service," Zhang said.

The northern province of Shanxi has just eased rules on home purchasing, becoming the fourth province to undo previous curbs on home sales.

So far this year, the government has already pushed forward favorable policies to encourage citizens to buy properties in lower-tiered cities, such as cutting down payments for second-home buyers from 60% to 30%, and giving out property subsidies to farmers.

The hope is that more rural workers and farmers will settle down in the cities. However, these favourable policies do not seem to be having much effect yet. It still takes three times more for small cities to de-stock than it does large cities. Yan Yuejin, head of research at R&D Institute, says the government should create conditions to lure more people into towns.

"The key is to introduce more industries; government should develop new growth points for lower tiered cities, combining those with agricultural production, population policies and transportation," said Yan Yuejin, head of research, R&D Institute.

"In that way, industrial parks and shopping districts could be created and that would attract more people to the lower tiered cities. The property market would be healthier as a result."

Yan also calls for regional governments to be on top of a complex of urban planning, in particular, limiting the land for residential building and reclaiming unused homes for further use. No one pretends, however, that problem of China's stockpile of empty homes can be solved overnight.