With a population of almost 1.4 billion, the Chinese government had created some moves in order to control population growth in their country. Almost every industry in China has been affected by the said population growth and most likely of the methods in controlling it.
In the real estate industry in particular, the Chinese government had to curb the home buying capacity of an individual through series of brakes, like the Shanghai hukou, or household registration. As a result, progress on China's real estate sector has been affected for it has become difficult for most buyers to purchase two properties in the Chinese city, thus resulting for it to be overstocked, as channelnewsasia reported.
Despite the said event, Chinese government would unlikely lift the said home-buying curbs, for it is the government's way of controlling population growth especially China's top tier cities. This has of course contributed to the problem of overstocked properties in the said cities. Shanghai in particular is left with nine properties for every new unit sold in October according to channelnewsasia.
This phenomenon was highlighted by the research director at real estate internet portal SouFun.com, Mr Chen Yanbin, detailing via channelnewsasia that;
"The rate of urbanisation is at 55 per cent but the rate of urbanisation with second-home permits is only 30 per cent. Resolving this difference is the next important step to clear housing inventory." Mr Chen also added that, "big cities will control population flow. Smaller towns should liberalise residency permits. Small and medium cities should relax the thresholds."
With the continuation of the process, amount of unsold properties in top cities are accumulating. And for an individual to purchase a second house in a particular urban city, it would take at least 3 years to process the application of the city's hukou, and of course not including the years of allowable stay in order to file the said application.
