Henyang, a Chinese city in the Central district, managed to do a u-turn from poor property market performances to an astounding recovery. This is after the city rescinded a policy which it enacted earlier. Reuters reported that the policy had curbed property prices, creating a spike in Chinese real estate firm shares.
It was a quick turnaround to the tune of just a day. The recovery was so drastic, city officials clarified the policy was scrapped on basis of the market stabilizing. To illustrate this point, analysts have shown the CSI300 real estate index rallying to as much as 2.4 percent.
Henyang's local government, however, said on Thursday that it admitted to not knowing the volatility governing housing prices. The order had also created massive speculation as well as a series of misunderstandings in the market. It was in the best interests of everyone who saw the order negatively that it was canceled, the local government officials released in a statement.
This was characteristic of the Chinese real estate market, which was dominated by built-to-sell properties and such. It had been a booming industry in the past two years, which was the reason why policies like this had been enacted to control the industry for the safety of new players.
Another reason that the property market had been doing well as the return of Chinese investors to properties in the local region. SCMP noted that they have, instead, focused on properties closer to home. Chinese investors have decided to move back to closer locations on the basis that London and Vancouver, as investment destinations, are already providing to be 'cold' locations.
Chinese investors have largely stayed away from locations that have foreign investment curbs in place. Majority of these locations are located in the UK and Canada and even some fairly close-by places like New Zealand and Australia. The countries have enacted policies, according to reports, to cool runaway property prices.
The South-east Asian move has been seen by analysts as positive because Chinese investors were 'looking' for new locations. While this is only a sign that investors, watching the global scene closely, were just diversifying their collection of portfolios, it could also provide a massive boost towards bringing more of the money back to home and the region, a position that China strongly supported.
