The Chinese government is determined to create the Xiongan New Area of North China's Hebei Province into a new zone that does not follow the same path of real estate-backed urbanization, modernization and growth experienced by China's major cities in past decades.
The State Council said in a newly released guideline on Thursday that developing large commercial property is banned in Xiongan and speculation on the local housing market will be strictly regulated. Home prices in surrounding areas will also be regulated, the guideline said.
The stance that a house is for living not for property speculation should be stuck to, and all the residents of Xiongan should have their place to live, the guideline reads. Equal importance is attached in the document to house purchase and house rental.
The guideline also stressed that houses with joint property rights between the government and individual occupiers should take a major proportion of all houses with individual property rights.
"Xiongan is currently the only place in China to clarify the above policy," said Yan Yuejin, research director at E-house China R&D Institute. He noted that as a pilot area, Xiongan is making a big reform.
"The guideline, which is mainly about building a new home supply system in Xiongan, offers a clear reform direction for the new area's property market," Yan told the Global Times on Thursday.
Cao Heping, a professor of economics at Peking University, told the Global Times on Thursday that the new guideline is not merely about Xiongan's real estate market. It was more focused on "urbanization, modernization and economic growth model," Cao said.
"The central government's guideline has just come at the right time for the emerging Xiongan in the sense that it rectifies the problems that have existed in China's first-tier cities where high home prices enhanced the threshold of enterprises entering the real economy, thus dragging down economic development," Cao said.
The phenomenon is obvious in Hong Kong, where industries find it hard to survive because of soaring property prices, Cao said. The gap is growing larger and larger in terms of GDP growth between Hong Kong and Shenzhen, South China's Guangdong Province, he noted.
On January 2, the State Council gave the green light to an overall plan to build the Xiongan New Area between 2018 and 2035. The plan aims to build Xiongan into a green, smart and innovation-driven city that flanks Beijing.
Along with the property policy unveiled Thursday, the State Council said it will encourage real estate investment trusts and other property financial innovation products for the new zone.
Yan said the products are an important direction for property financial reform.
"Currently there are only a few pilots for real estate investment trusts nationwide," he said. "For Xiongan, it is bound to bring benefits to future housing system reform."
A property craze emerged when the China announced in April 2017 the establishment of the Xiongan New Area.
The government responded by imposing strict regulations on developing and selling property in the area and restrictions on residential permit registrations.