Inside the Great Wall:Three cities announce additional tightening

Three cities announce additional tightening

    Changsha: 1) locals with two units and non-locals with one unit are notallowed to purchase any more units; 2) non-locals have to provide over 12-month proof of social insurance contribution for buying house unit; 3) newlybought units are not allowed to resell within two years. Wuxi: 1) non-localswith one unit are not allowed to purchase any more units; 2) newly boughtunits are not allowed to be resold within two years. Jiaxing: 1) units bought bynon-locals and the second unit bought by locals are not allowed to resell withintwo years. (Soufun)

    Deutsche Bank comment: We are seeing more cities to restrict reselling of newlybought units within the first 2-3 years. This will curb the investment demand andslow secondary transactions. We expect similar policies to be spreading to othercities with tightening measures. As such, we are expecting the national sales todrop 5-10% y-y in 2017 due to the high base in 2016 and also expecting a 5%price drop in T1/2 cities.