Chinese cities’ moves to ease residency curbs fuel property demand

Fog blankets Jincheng City skyline in north China's Shanxi province, in this March 2, 2007 file photo. (REUTERS)
Updated 20 January 2018

Chinese cities’ moves to ease residency curbs fuel property demand

BEIJING: China’s provincial capitals have discovered a way to keep apartment sales booming by making it much easier for graduates to get coveted household registration permits.
Authorities in the cities said the main aim is to lure talent to make their labor pools more attractive to companies. But the policies are undermining the authorities’ efforts to control property speculation and are artificially propping up prices, critics in the real estate and securities industries said.
The permits, known as hukou, have been used to control internal migration in China for many years. Without a permit, a resident of a city may not be able to get a whole slew of public services, including education and health care, and would sometimes have to live on the margins of society.
Now, cities such as Chengdu — the capital of Sichuan province in southwest China — are reversing the process by handing out hukou to college-degree holders. In Chengdu’s case that is anyone under the age of 45.
Not only that. They are in some cases providing these graduates with cash incentives if they buy an apartment.
For example, any post-doctoral degree-holder who takes up hukou in central China’s Zhengzhou, capital of Henan province, will be handed 100,000 yuan ($15,617) for a first home purchase. For college-degree holders the incentive is 20,000 yuan.
As a result, hundreds of thousands of people have been able to buy properties that were otherwise off limits for them.
Take 27-year-old graduate Peter Li, who faced barriers to buying in Chengdu last year because he was from the northwestern province of Gansu.
Then in July the new policy was introduced, and he bought a three-bedroom apartment in the upscale high-tech zone of the city.
“Getting a hukou through the talent policy was a more convenient way to get around the housing curbs,” said Li, who moved to Chengdu, which has 17 million people, to work as a product manager in 2016.
By mid January — just over five months after the change — more than 120,000 people had been able to get a Chengdu hukou through the new policy, said Chengdu’s official Talent Work Leadership office.
And Chengdu’s resale market soared. The number of sales registered with the housing bureau, which could lag real-time transactions by up to two months, have climbed to 8,798 in December, up 40 percent from July’s 6,252, data from Chengdu property net showed. The local real estate portal said it tracks data published daily by the Chengdu housing bureau.
Average prices in some prime locations had risen to about 16,000 yuan ($2,498) per square meter in December, up about 30 percent from their levels in July, according to data from property realtors, including Fang.com.
At least 10 other provincial capitals have also loosened their hukou rules, and some have offered incentives.
In such cities the changes have effectively weakened existing curbs brought in over the past year to tame speculation. That has prevented price falls and in some cases helped to trigger significant price increases, according to property agents and analysts.
“It’s a disguised way for the government to relax the curbs,” said a Chengdu-based agent at Lianjia, a large Chinese real estate agency, declining to be named as she was not authorized to speak to the media.
Traditionally, China’s four top-tier cities, Beijing, Shanghai, Guangzhou and Shenzhen, have been the most sought-after destinations for young and educated migrants seeking higher pay and better opportunities.
By contrast, less developed tier-2 provincial capitals have mainly been a magnet for people from smaller cities within the province.
While hefty living costs, soaring property prices and pollution have seen some reverse in flow from top-tier cities to provincial capitals, the wages gap is a big turn-off.
Chengdu’s average white-collar salaries in the third quarter last year came in at 6,910 yuan ($1,079) per month, about 43 percent less than the figure in Beijing, according to Zhaopin.com, one of China’s biggest recruitment portals.
Six property agencies in Chengdu surveyed by Reuters estimated between 50 percent to 70 percent of their sales have been made off newly minted Chengdu hukou holders in recent months.
The impact is gradually being felt at the national level. Official data on Thursday showed China’s new home prices accelerated to a five-month high in December, with property prices in tier-2 cities recording the strongest price growth.
The Chengdu government said it did not set the bar excessively low for outsiders, stressing the importance of attracting talent.
The city will “continue to satisfy the needs of first-time home buyers and their rigid demand, and those who want to improve their housing conditions, while cracking down on speculation,” the government said.
Home buyers are still subject to existing tightening measures such as having to hold on to their properties for at least three years before selling.
China’s State Council Information Office (SCIO), which doubles as the Communist Party’s communications arm, said the moves undertaken by the tier-2 cities would only increase the size of qualified home buyers “by a small scale.”
Such demand — seen as the opposite of speculative forces — is in line with the view from China’s top leaders that “homes are meant for living, not for speculation,” it said.
SCIO applauded the cities’ “effectiveness and timeliness” in expanding their respective talent pools as the country strives for more balanced and higher quality growth, especially in its less prosperous hinterland.
Still, there is concern that the strategy will end up being counterproductive by fueling price rises, which in turn could make apartments too expensive for many people born and bred in these cities, building resentment against the city’s government and the newcomers allowed hukou.
— REUTERS


Electric luxury vehicles, SUVs ‘more likely to cause accidents’

Updated 30 min 37 sec ago

Electric luxury vehicles, SUVs ‘more likely to cause accidents’

  • As EV sales rise, French insurer AXA warns that drivers are struggling to adapt to cars’ rapid acceleration

LONDON: Electric luxury cars and sport utility vehicles (SUVs) may be 40 percent more likely to cause accidents than their standard engine counterparts, possibly because drivers are still getting used to their quick acceleration, French insurer AXA said.

The numbers, based on initial trends from claims data and not statistically significant, also suggest small and micro electric cars are slightly less likely to cause accidents than their combustion engine counterparts, AXA said at a crash test demonstration on Thursday.

AXA regularly carries out crash tests for vehicles. This year’s tests, which took place at a disused airport, focused on electric cars.

Overall accident rates for electric vehicles are about the same as for regular cars, according to liability insurance claims data for “7,000 year risks” — on 1,000 autos on the road for seven years — said Bettina Zahnd, head of accident research and prevention at AXA Switzerland.

“We saw that in the micro and small-car classes slightly fewer accidents are caused by electric autos. If you look at the luxury and SUV classes, however, we see 40 percent more accidents with electric vehicles,” Zahnd said.

“We, of course, have thought about what causes this and acceleration is certainly a topic.”

Electric cars accelerate not only quickly, but also equally strongly no matter how high the revolutions per minute, which means drivers can find themselves going faster than they intended.

FASTFACT

Accident rates among luxury and SUV electric vehicles are 40 percent higher than for their combustion engine counterparts.

Half of electric car drivers in a survey this year by AXA had to adjust their driving to reflect the new acceleration and braking characteristics.

“Maximum acceleration is available immediately, while it takes a moment for internal combustion engines with even strong horsepower to reach maximum acceleration. That places new demands on drivers,” Zahnd said.

Sales of electric cars are on the rise as charging infrastructure improves and prices come down.

Electric vehicles accounted for less than 1 percent of cars on the road in Switzerland and Germany last year, but made up 1.8 percent of Swiss new car sales, or 6.6 percent including hybrids, AXA said.

Accidents with electric cars are just about as dangerous for people inside as with standard vehicles, AXA said. The cars are subject to the same tests and have the same passive safety features such as airbags and seatbelts.

But another AXA survey showed most people do not know how to react if they come across an electric vehicle crash scene.

While most factors are the same — securing the scene, alerting rescue teams and providing first aid — it said helpers should also try to ensure the electric motor is turned off. This is particularly important because unlike an internal combustion engine the motor makes no noise. In serious crashes, electric autos’ high-voltage power plants automatically shut down, AXA noted, but damaged batteries can catch fire up to 48 hours after a crash, making it more difficult to deal with the aftermath of
an accident.

For one head-on crash test on Thursday, AXA teams removed an electric car’s batteries to reduce the risk of them catching fire, which could create intense heat and toxic fumes.

Zahnd said that studies in Europe had not replicated US findings that silent electric vehicles are as much as two-thirds more likely to cause accidents with pedestrians or cyclists.

She said the jury was still out on how crash data would affect the cost of insuring electric versus standard vehicles, noting this always reflected factors around both driver and car.

“If I look around Switzerland, there are lots of insurers that even give discounts for electric autos because one would like to promote electric cars,” she said.