Hainan province in China. Photo: iStock
Hainan province in China. Photo: iStock

Call it the Chinese way of property price control. Chinese speculators were jubilant last week after a series of moves were flagged that could turn Hainan into a Chinese version of Hawaii, with horse-racing and a lottery, but their mood quickly changed after another announcement on Sunday.

That was because Beijing decided to impose strict controls on homebuyers that some said even the super-rich like Jack Ma and Warren Buffett could not afford.

The Hainan government stipulated that non-locals cannot buy homes unless they have been registered in a social security fund for 24 months, and 60 months if they want to buy properties in the more upmarket Haikou, Sanya and Qionghai.

These restrictions, which also limit non-locals to buying only one apartment along with a 30% mortgage restriction and five-year lock-up period, are similar to the rules imposed in Xiongan, a new area outside Beijing, in a demonstration that Beijing is determined to curb property speculation.

The move is consistent with President Xi’s push to build homes for the needy and to cut out speculation. Xi talked about this at the Boao Forum in Hainan earlier this year when he was there to celebrate the 30th anniversary of the Hainan special trade zone and the 40th anniversary of China’s reform and liberalization.

Unlike other major provinces, Hainan only has a population of eight million, but it was able to match first-tier city home prices because the market had been dominated by outside investors.

To further curb speculative moves, Hainan’s government also limited the land supply by withholding land auctions.

One may wonder why the provincial government did not capitalize on the rising prices of land, similar to what the cash-rich Hong Kong special administrative region government did. But it seemed Beijing had already taken this into consideration.

Otherwise, why would Hainan be allowed to have casinos like Macau and horse racing like Hong Kong when the island turns into China’s free-trade port?