【Bloomberg】Single? Not Paid Enough Tax? China Has a Home Ban for You

The rapid U-turn and oddly precise rules highlight the vast array of policy levers Chinese authorities have at their disposal as they seek to pop housing bubbles before they inflate, while keeping the economically crucial property industry chugging along. While countries such as Australia, Singapore or the U.S. confront surging house prices with restrictions of foreign buyers, tightened loan-to-value limits or higher interest rates, China’s all-powerful Communist government has free range to fine-tune the housing market as it sees fit.

“I’ve never seen any other country have restrictions that are so detailed and meticulous,” said Chen Gong, the chief researcher at Beijing-based Anbound Consulting, which bills itself as the biggest independent strategic think tank in China. “In most nations, a market problem is fixed by the market. In China, all crucial issues are decided by the government, especially the property market.”

Given the government’s wide range of policy options, it’s hardly surprising when its efforts are successful, like keeping home prices in the biggest cities largely flat since 2016. Yet, even with such control, China has also had some failures as it over- or under-reacted to the market. A down-payment cut for second-home purchases in 2014 was unexpectedly followed by six central bank interest rate reductions within the next 12 months, fueling a 50% surge in home prices over the following two years.

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