Baoding, a city in northern China that will border the planned metropolis of Xiongan, has set the harshest transaction limit yet on new apartments to be built in the city.
To discourage speculators hoping to cash in on the rosy economic prospects of the area, houses built on a tract of prime residential real estate in Baoding, Hebei province, will be subject to a 10-year waiting period before they can be resold, local newspaper Yanzhao Metropolis Daily reported on Monday.
The 100,361-square-meter piece of land, located in the western part of the city some 60 kilometers away from the future Xiongan New Area, will be up for bidding on June 6, according to a document seen by the newspaper. The government also demands that property developers bid no more than 11 million yuan per mu (about $2,400 per square meter), and that they sell apartments built on the land for no more than 13,000 yuan per square meter.
Since the central government announced on April 1 that three counties administered by Baoding have been earmarked for Xiongan New Area, apartments in the city have been particularly favored by investors. Compared to the previous year, secondhand houses in Baoding increased in price by 51 percent in March and 62 percent in April, according to online real estate portal Fang.com.
From China’s largest cities to its poorest rural counties, local governments recently introduced a raft of regulations to curb overheating real estate markets. Measures include similar bans on short-term reselling of properties, but the time limits imposed so far have ranged from two to five years.
Although only one piece of land in Baoding is subject to the regulation for now, Shi Song, director of a research division at the Shanghai Urban Planning and Design Research Institute, told Sixth Tone that he thinks the policy might eventually be applied to all land in the city. “But then the problem will be: If the policy covers the entire city, how will it affect land that was sold before the regulation was imposed?” Shi said.
Along with the 10-year ban on reselling, Baoding has also prohibited local residents with at least two properties and nonlocals with at least one property from purchasing additional homes. And if nonlocals want to buy their first home, they are required to show proof that they have paid taxes or social security fees for at least three years in the city.
“This kind of policy will increase costs for home developers and homebuyers, which means they will have to be more realistic when considering purchasing land or apartments,” Yan Yuejin, research director at real estate agency E-house China R&D Institute, told Sixth Tone.
“Only in this way can the government achieve the goal of ensuring that ‘Houses are for living, not for speculating,’” Yan said, referring to a catchphrase that has appeared frequently in official remarks since China’s annual economic policymaking conference last year.
Editor: Kevin Schoenmakers.