In an effort to avoid property speculation, the eastern Chinese city of Nantong along with a number of other port cities has now imposed a ban on the resale of cheap properties and homes. The near-term resale ban is the latest measures imposed by authorities to stop punters and property flippers from temporarily inflating prices and disrupting the market.
Nantong government officials announced on Wednesday that buyers that purchase properties and homes at prices lower than the market average will no longer be allowed to resell over a period of five years. This is to ensure that buyers will be limited only to those who intend to keep or use the properties and homes they purchase for the long-term.
Since 2016, authorities have been trying to find ways to crack down on property speculation to avoid price over inflation. With the recent slowdown in economic growth, property prices have gone down in certain regions, attracting investors looking to make a quick buck by bulk purchasing cheap properties and reselling them at much higher prices to uninformed buyers.
Wholesale purchasing and reselling of properties are seen by authorities as a possible threat to the market, which is one of the pillars of China's broader economy. To put a stop to the practice, officials have called on China to adopt policies that will ensure market stability.
By imposing such measures, local government officials hope to keep home prices at a more stable level. As China continues to struggle given the current geopolitical situation, officials now want to make sure that the property market does not cannibalize itself as investors take advantage of price drops.
Analysts predict that home prices in top-tier cities such as Beijing, Shanghai, and Shenzhen will likely experience stagnation in the coming years. The forecast is based on the expectation of a further 6 percent drop in economic growth in 2020.
Nantong's short-term reselling ban comes at the heels of a recent measure imposed by the housing bureau in Baoan district. Authorities imposed measures that essentially halted the sale of all homes within a massive housing estate in Shenzhen. The measure was imposed to put a stop to "vicious speculation activity" in the area.
The move was initiated after reports of a group of people claiming to be homeowners within a 1,200-unit housing estate had called on residents to raise their asking prices to a minimum of 55,000 yuan per square meter. The call was posted on WeChat earlier in the month, likely by recent property owners in the area that were looking to make substantial gains from their recent purchase.
Authorities felt that the tactic was unethical and against the government's directive. China's central government has repeatedly stated that homes should be for living in and not for investor speculation.
