Ministries relax rules to allow flexible land use, spur demand

Local authorities have been encouraged to relax their rules on land sales in an effort to create more affordable housing, two official government websites confirmed on Friday.

A jointly circular from the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development said land supply structures should be adjusted to allow developers to better meet current market conditions.

Commercial residential buildings already under construction or with approval can now be used as replacement housing for shantytown residents or for public rental housing.

More undeveloped land earmarked for real estate development could also be made available for a wider range of property development categories, including housing for pensioners, commercial properties for culture, sport and other emerging sectors supported by the government.

Analysts said the new land-use rules will help the property market absorb ever-growing housing stock, built up in recent years as market demand fell in certain markets.

The announcement marks the latest in a series of moves to support the housing industry made since Premier Li Keqiang delivered his Government Work Report earlier this month, and homebuyers and market insiders expect further measures to follow.

On March 20, Chen Zhenggao, minister of housing and urban-rural development, called on local governments to make better use of housing provident funds, for instance, to help low-and-mid-income residents improve their living conditions, reported Xinhua News Agency.

Market insiders said that Friday's circular, however, is not an easing in overall property market restrictions but more of a signal that the regulators are willing to take measures to increase demand in certain specific areas of the market.

"There have been plenty of residential projects, especially very spacious or luxury housing projects, in some cities, but affordable housing projects have been in short supply," said Jenny Wu, head of residential services in eastern China for DTZ, a property services provider.

"Many homebuyers complain they cannot afford these types of apartments and developers have been finding them difficult to sell, so the supply patterns needed to be changed."

According to a research from global real estate consultancy Savills, residential housing stocks in some second-and lower-tier cities, such as Shenyang, Qingdao and Dalian, have been rising.

Large tracts of land are still being approved for expensive residential property projects while demand is not strong enough even for those already built in some cities, it said.

On the other hand, in first-tier cities including Beijing and Shanghai, land for housing projects has been in short supply in central districts, forcing residential developers into suburban areas.

Some relaxations in home loan conditions, such as the lowering of down payments for home purchase and the lifting or easing of the number of properties residents can buy, have not been introduced in those two cities and may not be for some time, said Knight Frank Shanghai, because they might be counterproductive to the kind of stable growth the government is aiming to maintain, allowing a rise again in property speculation.

wuyiyao@chinadaily.com.cn