Authorities curb property investment spree following announcement of landmark Xiongan New Area

14:05, April 05, 2017   People's Daily Online

(Photo/China News Service)

After witnessing a home-buying spree that quintupled housing prices overnight, authorities of Xiong'an New Area in northern China’s Hebei province imposed stricter control over the overheated market on April 4.

The preparatory committee of Xiong'an New Area targeted all forms of illegal property trade and vowed to crack down on illegal constructions. The committee also said in a statement that it will strictly implement a central government guideline that states "houses are for living in, not for using to speculate,” the Xinhua News Agency reported.

The establishment of Xiong'an New Area was announced on April 1. The region, spanning three counties in northern China's Heibei province – Xiongxian, Rongcheng and Anxin - enjoys the same status as the Shenzhen Special Economic Zone and Shanghai Pudong New Area, according to Xinhua, which added that such designated areas are part of a strategy “crucial for the next millennium.”

Innovation will be the fundamental driver in building and developing Xiong'an New Area, and policies will be put in place to bring in innovative elements. New administrative, investment and financing models will be implemented on a trial basis in the special zone.

Establishing Xiong'an New Area is "a very important, integral part" of measures to transfer non-capital functions out of Beijing to cure its “urban ills,” which range from traffic congestion to excessive burden on resources, He Lifeng, head of the National Development and Reform Commission, told Xinhua.

The breaking news immediately drew wide support from locals and authorities alike, with many predicting that the new area would help to boost Hebei’s economy, as its GDP has ranked lower than those of other provincial regions in the past two years.


But what arrived in the new area even faster than industrial investment was feverishly eager home-buyers.

Less than 24 hours after the announcement, counties located within the new area began to see home-buyers flocking into the region, toting millions in cash in order to grab properties on land expected to be on the receiving end of national and even international investments. Many buyers swarmed into the region overnight, immediately after the announcement, cramming hotels and filling the nameless streets with cars sporting non-local license plates.

Under exploding market demands, housing prices within the new area have shot up from 4,000 RMB per square meter in 2015 to a current average of 15,000 RMB per square meter, with some high-end properties boasting per-square-meter prices of over 50,000 RMB, the Global Times reported, citing local real estate agents.

The home-buying rampage not only affected counties within the new area, but also spread to areas beyond it. Housing prices in Baigou – some 20 kilometers away from Xiong'an New Area – doubled to 14,000 RMB per square meter overnight. A buyer from Inner Mongolia Autonomous Region reportedly spent 72 million RMB on an eight-floor building in Zhuozhou, some 70 kilometers away from the center of the new area, according to financial news outlet Yibencaijing.

In response, authorities stepped in to stop the frenzy. By April 4, the preparatory committee of Xiong'an New Area had arrested seven people suspected of deliberately raising local housing prices, and shut down a total of 71 real estate sales offices and 35 real estate agencies. Some 125 illegal construction sites were also torn down, the committee said in a statement.