Regulators on Tuesday announced a nationwide crackdown on violations by property developers and agents that may be driving up prices, a move experts said will deflate housing bubbles and stimulate sales in the long term.
They also forecast that China's property market will develop soundly in 2017, despite fluctuations that may occur as the market adjusts at the end of 2016.
The month-long investigation, which is set to begin on Thursday, will review real estate developers and agencies' working practices, such as whether home prices are "genuine and marked clearly" in sales offices, according to a statement jointly released by the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development.
Fees related to property transactions should also be disclosed, and property agencies must disclose the number of unsold houses within a certain time, said the statement. It also stressed that any violations will lead to severe penalties.
The investigation is part of a series of actions by the central government to rein in the overheated property sector, following controls announced in early October, including purchase restrictions and tightened mortgage conditions, Yan Yuejin, research director at E-house China R&D Institute, told the Global Times on Tuesday.
Yan said inflated demand will be curbed in the wake of these government moves.
The policies can create a transparent housing market where information asymmetry between home buyers and property enterprises is eradicated, Hui Jianqiang, research director with real estate information provider Beijing Zhongfanyanxie Technology Service, told the Global Times on Tuesday.
In the long term, as prices reflect actual demand, potential buyers will end their wait-and-see behavior, which has curtailed transactions, Yan said.
For example, sales volume in Beijing plunged 41 percent year-on-year in October, and Shanghai sales slid 18 percent, data of the China Real Estate Information Co showed. Transactions in smaller cities fell 50 percent on average.
Tighter oversight will prompt a property industry reshuffle, driving out "irregular" players with bad reputations, Hui noted.
As of Tuesday, though, irregularities were still common in Beijing. Out of the three property agencies in Beijing's Chaoyang District the Global Times visited, two were only giving vague information on prices of apartments for sale. They also declined to comment on the upcoming government investigation.
Even major developers aren't immune to tougher government oversight. In recent months, China Vanke Co, Dalian Wanda Group and Greenland Holdings, among others, have been penalized for violating various sales regulations, according to media reports.
Given a better regulated environment and stable market demand, experts expect prices to stabilize at the beginning of 2017.
The property market has already shown signs of cooling. In the first half of October, new home prices in Beijing rose 1.2 percent, slowing from 4.9 percent in September; meanwhile, prices rose 0.6 percent in Shanghai after climbing 3.2 percent in September, according to the National Bureau of Statistics.
