Move affects areas where inventories are above average
South China's Hainan Province will tighten approvals for land earmarked for the development of commercial housing to avoid exacerbating its glut of residential property, the Guangzhou-based 21st Century Business Herald newspaper reported Wednesday, citing an official circular.
Cities and counties where inventories exceed the province's average of 45 months will stop granting approvals for land to be used for the development of new homes and apartments, as well as hotels, according to the circular.
The province will also stop approving new plans for residential developments.
The island province relies heavily on real estate development and is facing a housing oversupply.
Property investment accounted for more than half of the province's total fixed-assets investment in 2015, the circular said.
As of the end of the 2015, the province had commercial housing inventory of 41 million square meters, which may take on average as long as 45 months to clear, much longer than the national average of approximately 23 months, the report said.
The provincial government said the suspension of new land grants is not intended to shore up housing prices but to reduce inventory by restricting the new supply.
The provincial government also called for furthering the nation's urbanization drive and deepening reforms of administrative and financial policies to help reduce the housing inventory.
Hainan Province has also told cities and counties that have a lower-than-average inventory level to rein in the supply of new land for property development.
Hainan's move followed recent actions by different localities such as East China's Jiangxi Province and North China's Inner Mongolia Autonomous Region to reduce housing inventories.
In December 2015, a key central government meeting designated the reduction of housing inventories as a key target.
On Tuesday, the central government banned local governments from borrowing from banks to finance land purchases and preparations for property development, according to a statement jointly issued by the Ministry of Finance, the Ministry of Land and Resources, the People's Bank of China and the China Banking Regulatory Commission.
