介绍:
Topic 2 Can China's new policy in support of renting drive down house prices?
>>>>For Chinese consumers – particularly those living in big cities – affording a house is one of the biggest challenges, as policymakers strive to maintain a healthy growth in the housing market while keeping it from overheating.
Among the multiple factors that pressure people in China to buy property rather than rent, having access to social welfare reserved for local home owners has been one of the biggest drivers behind surging prices in first-tier megacities.
It has also become a significant wedge between local residents and migrant workers.
A new policy aiming to tackle perceived unfairness and inequality has been on trial in south China's Guangzhou, and other tier one cities are likely to follow suit.
The measures are expected to cool the heated market by supporting tenants and boosting the rental sector as an alternative to owning a property.
But will the new policy achieve this?
Talking Points
1. What is this new policy? - The "equal right policy" gives renters access to local education resources. In recent years, migrant workers have moved to China's biggest cities, only to find their children shunned out of the local school system. School catchment areas reserved registration only to children of home owners who lived nearby.
By trimming off this advantage enjoyed by home owners, the new policy could help drive potential buyers into the rental market, therefore reducing demand and prices altogether.
How well has it done in Guangzhou? - In Guangzhou, the market performance suggests the policy has seen some success so far. Xinxi Shipao, a local newspaper in Guangzhou, reported that second-hand property sales had dropped across the city a month into the introduction of the policy.
Would this work in Beijing? - Beijing could be another city to benefit from the same way of policy thinking, after years of sky-high property prices also driven by school catchment area rules favoring homeowners.
Extra info - Prices for houses close to quality schools led to some used properties being priced at 200,000 yuan per square meter in the Chinese capital. The heat only cooled down after local administrators announced plans to phase out the catchment area rules.
But not everyone is in favor of the new policy. The supply of quality education resources in developed areas, among other social benefits may struggle to catch up with the increasing demand as a result of continuing population inflow.
