Chinese government plays hardball with dishonest property agents and
South China Morning Post
15 October 2016
The mainland’s battle against housing inflation is turning nasty in
some cities, with public shaming, arrests and raids on offices in
search of evidence of forged documents and dishonest marketing.
On instructions from the leadership in Beijing, a campaign has taken
shape across the nation early this month to freeze housing prices with
involvement of not only banks and housing authorities but also police
and propaganda departments.
Municipal authorities in more than 20 cities where home prices are
rising fastest have tightened restrictions on home purchases by banning
many potential buyers from the market and squeezing credit.
mobilised law enforcement
The government has also mobilised law enforcement to punish “illegal” marketing and rumour-spreading.
In Shenzhen, the quality supervision commission, which usually looks
after food safety, on Thursday sent 12 teams to “raid” 20 property
sales offices across the city to “shock” developers and sales staff.
Government officials stormed into the offices and ordered employees to
produce all legal documents to check against marketing claims.
dishonest about sales performance
One development, Qianhai Dongan, where units sell for 75,000 yuan
(HK$86,500) per square metre, was found to have been dishonest about
sales performance. It sold 20 per cent of the available units flats on
the first day but publically claimed 90 per cent had sold out in two
hours. It had “misled consumers” by putting a kindergarten sign on its
model table – but the school does not appear in municipal planning
records, the commission said in a statement.
The city’s internet administration has contacted the management of
major property websites and portals telling them to stay in line. A
person who made comments online under the name “Today I buy a home” was
arrested for spreading rumours that speculators in Shenzhen were
because of the government’s moves to rein in prices, the housing ministry said in a statement.
So far, Beijing has preferred to point the finger at greedy developers
and crooked sales agents, while avoiding taking fundamental steps to
directly address the problem, such as boosting land supply or charging
Louis Kuijs, the head of Asia Economics at Oxford Economics, wrote in a
note that the leadership was unwilling to take serious steps to tighten
credit at the national level, as Beijing viewed “rapid credit growth
and a recovery in real estate key in meeting GDP growth targets”.
Although some local governments were trying to address the problem,
they were also “glad to see land prices rise as that boosts revenues
from land sales”, Kuijs said.
a lack of investment alternatives
Claire Huang, a China economist at Societe Generale, said a lack of
investment alternatives, rather than dishonest dealers, was underlying
housing inflation in major cities.
“Yield-hunting investors will continue to jostle for assets generating
high returns, which in turn will push up asset prices,” said Huang.