Housing Should Be for Living In, Not for Speculation, Xi Says

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  • Says housing supply will be supplemented by multiple policies
  • Reference closely echoes language issued by panel in December

What Xi's Party Congress Speech Means for Investors

Chinese President Xi Jinping renewed his call to ensure housing market stability and pledged that authorities will help meet demand by adding more supply of homes.

"Houses are built to be inhabited, not for speculation," Xi said in his address at the 19th Party Congress Wednesday in Beijing. "China will accelerate establishing a system with supply from multiple parties, affordability from different channels, and make rental housing as important as home purchasing."

Xi Jinping speaks on Oct. 18.

Photographer: Qilai Shen/Bloomberg

The speculation reference closely echoes language issued in December, when Xi gathered top lieutenants for the Central Economic Work Conference to chart policy for 2017. Xi also called Wednesday for sound macroeconomic regulation and more effective market mechanisms.

Read More: China Plans Prudent, Neutral Monetary Policy

China’s leaders are determined to cool rising home prices, imposing buying restrictions to rein in demand. Curbs in bigger cities have spurred buying in smaller ones, forcing local authorities to reverse policies put in place last year to reduce a glut of unsold homes.

“At such an important occasion, it is quite unusual for top leaders to be so straightforward,” Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong, said in a note. “As such, it’s quite likely that the government will announce a so-called property long-term mechanism around the Central Economic Work Conference this December. This also implies that we’re unlikely to see any loosening in property measures in 2018.”

The central government earlier this year unveiled an initiative to increase rental homes, including a trial in 12 large cities that would potentially be expanded across the nation. Part of the demand for housing in big cities has been driven by the availability of public services, such as access to schools. Some cities such as Beijing are considering extending those public amenities to renters as one possible way to slow demand for buying homes.

Home prices rose in fewer Chinese cities in August and declined in some of the nation’s hottest markets as authorities rolled out a series of restrictions to tame the property boom. 

Read More: Campaign to Cool House Prices Could Ease as Curbs Bite

New-home prices, excluding government-subsidized housing, gained in 46 of 70 cities tracked by the government in August, compared with 56 in July, statistics bureau data show. That was the smallest number of increases since January. Prices fell in 18 cities from the previous month and were unchanged in six.

Guangzhou, one of the biggest cities, finally joined Beijing, Shanghai and Shenzhen in reporting flat or declining prices. Guangzhou’s prices fell 0.7 percent after rising 28 months.

The southern island of Hainan, a favorite tropical destination for domestic travelers and investors looking for second homes, will cut its economic reliance on real estate, an official said Wednesday. The province’s real estate industry has contributed about half of local tax income and fixed-asset investment over the past three years, Deputy Party Secretary Shen Xiaoming said in group discussion on the sidelines of the congress.

— With assistance by Jeff Kearns, and Emma Dong

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