Having experienced the impacts of the COVID-19 outbreak in 2020, the intensified trade competition between China and the United States, and the uncertainty of the U.S. election, the Mainland has actively increased countercyclical fiscal and monetary adjustments, and these have resulted in obvious recovery pace in the Chinese economy, as well as helping alleviate the epidemic influences to the property market. Entering the Year of the Ox, and under the background of ” Housing for Living, Not for Speculation ” and the ebb of a housing reform for low-income group, how will the mainland property market be changed?
In view of the measures in the property market, to achieve the goal of stabilising land prices and housing prices, local governments are able to implement flexible city-specific policies, under the basic principle of “Housing for Living, Not for Speculation”. It is highly hoped that the property market can have a smooth transition amid the macroeconomic counter-cycle and create favorable conditions for the subsequent stable and healthy development of the future property market.
Besides, as the economy recovers, the monetary easing policy could be further stabilised during the year, shifting from the current loose policy to a neutral one. It is understood that the market is closely looking forward to the “Three Red Lines” policy proposed by the central bank of China last year, and the policy details are expected to be officially promulgated within this year.
In terms of housing prices, there could be a slight upward trend this year in the primary residential property market across the country. If the pandemic is completely over within this year, the housing prices of new homes are expected to a smooth run.
However, given the price restrictions and mortgage policies in some red-hot regions, it is believed that the price improvement will still be relatively slow; the housing price of secondary residential property market will rise steadily, depending on the development of prevention and control measures for the pandemic, the solid demand driven by population mobility, and the performance of land sales.
The overall national home price is expected to increase 5-8% year-on-year this year. Across the country, the number of cities with falling home prices could gradually decline from last year’s twenty percent. As for the room for subsequent home price growth in the first-tier cities, it is expected to be quite limited, since the overall housing prices there have already at a relatively high level.
On the contrary, the property market in current developing locations, such as the Greater Bay Area, still has room for home price growth. Nonetheless, the growth momentum could also be restrained by the upgrading of home purchase measures.