Thu, Jan 25, 2018 - Page 9 News List

Chinese cities easing residency curbs fueling property demand

Provincial capitals are easing household registration curbs for educated people in a bid to lure talent, but critics say the schemes aim to boost government revenue and risk fueling a rise in property prices

By Yawen Chen and Ryan Woo  /  Reuters, CHENGDU and BEIJING

Illustration: Mountain people

China’s provincial capitals have discovered a way to keep apartment sales booming by making it much easier for graduates to get coveted household registration permits.

Authorities in the cities said the main aim is to lure talent to make their labor pools more attractive to companies.

However, the policies are undermining the authorities’ efforts to control property speculation and are artificially propping up prices, critics in the real estate and securities industries have said.

The permits, known as hukou (戶口), have been used to control internal migration in China for many years. Without a permit, a resident of a city might not be able to get a whole slew of public services, including education and healthcare, and would sometimes have to live on the margins of society.

Now, cities such as Chengdu — the capital of Sichuan Province — are reversing the process by handing out hukou to college degree holders. In Chengdu’s case that is anyone under the age of 45.

Not only that. They are in some cases providing these graduates with cash incentives if they buy an apartment.

For example, any post-doctoral degree holder who takes up hukou in Zhengzhou, capital of Henan Province, would be handed 100,000 yuan (US$15,617) for a first home purchase. For college degree holders the incentive is 20,000 yuan.

As a result, hundreds of thousands of people have been able to buy properties that were otherwise off limits for them.

Take 27-year-old graduate Peter Li, who faced barriers to buying in Chengdu last year because he was from Gansu Province in the northwest.

Then in July last year the new policy was introduced and he bought a three-bedroom apartment in the upscale high-tech zone of the city.

“Getting a hukou through the talent policy was a more convenient way to get around the housing curbs,” said Li, who moved to Chengdu, which has 17 million people, to work as a product manager in 2016.

By the middle of this month — just more than five months after the change — more than 120,000 people had been able to get a Chengdu hukou through the new policy, Chengdu’s official Talent Work Leadership office said.

And Chengdu’s resale market soared. The number of sales registered with the housing bureau, which could lag real-time transactions by up to two months, climbed to 8,798 last month, up 40 percent from July last year’s 6,252, data from Chengdu property net showed.

The local real-estate portal says it tracks data published daily by the Chengdu housing bureau.

Average prices in some prime locations had risen to about 16,000 yuan (US$2,498) per square meter last month, up about 30 percent from their levels in July last year, according to data from property realtors, including Fang.com.

“DISGUISED” SUPPORT

At least 10 other provincial capitals, including Wuhan and Changsha in Hubei and Hunan provinces respectively, have also loosened their hukou rules, and some have offered incentives.

In such cities the changes have effectively weakened existing curbs brought in over the past year to tame speculation.

That has prevented price falls and in some cases helped to trigger significant price increases, according to property agents and analysts.

“It’s a disguised way for the government to relax the curbs,” said a Chengdu-based agent at Lianjia, a large Chinese real-estate agency, declining to be named as she was not authorized to speak to the media.

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