From March 30th to April 1st, a wave of new property regulations known as the "Guowu" policy was rolled out across major Chinese cities such as Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin, Chongqing, Nanjing, Dalian, Jinan, Hefei, Xiamen, and Qingdao. These measures have sparked widespread public debate, especially regarding personal income tax at 20%, increased down payment requirements for second homes, and stricter interest rate controls, along with concerns over rising new home prices.
In Beijing, the so-called “Five-Article Rule†came into effect on March 31st, imposing stricter conditions on single individuals purchasing properties and increasing the down payment ratio for second homes. The rules also clarified that existing and new policies would be based on the contract signing date. In Shanghai, the focus was on tightening credit checks for borrowers, including those from overseas, foreigners, recent divorces, and younger buyers, to prevent illegal lending to those who don’t meet credit standards. The city also banned purchases by those who already own three or more homes.
Guangzhou maintained its purchase restrictions and price caps, while requiring all provincial cities to connect their housing information systems within the year. Meanwhile, cities like Jinan, Nanjing, and Qingdao introduced specific rules limiting the price increases of new residential properties to below the growth in urban residents' disposable income. In Chongqing, developers facing excessive pricing or rapid price hikes may not receive pre-sale permits, adding another layer of control.
This round of "central-local linkage" real estate regulation has been seen as a strong response to rising house prices, signaling the government’s determination to maintain stability in the property market. The tightened policies are likely to have a direct impact on construction steel demand, especially in second-tier cities where local regulations could lead to reduced construction activity.
Currently, construction steel accounts for about 50% of China’s total steel consumption, with over 60% of that used in real estate projects. A decline in real estate demand could significantly affect the steel industry, impacting downstream sectors such as appliances, hardware, and automotive industries. Additionally, a cooling property market may dampen overall steel demand, leading to a more pessimistic outlook in the steel market.
However, despite these challenges, some local policies still aim to stimulate new housing supply through affordable housing initiatives, slum renovations, and land releases for ordinary commercial housing. These efforts could help sustain new home development, even amid regulatory pressures. As a result, while the construction steel market may face short-term headwinds, long-term demand might remain stable due to these supportive measures.
In the short term, with spring weather improving, construction sites are expected to ramp up in April, but this increase is likely seasonal. However, as property market regulations continue to tighten, long-term demand for construction steel will likely be constrained, leading to weaker market confidence and limited price recovery.Expanded Metal Mesh: Expanded metal mesh is a type of sheet metal that has been cut and stretched to create a pattern of interconnected diamond-shaped openings. This process enhances the strength and rigidity of the material while maintaining its lightweight nature. Expanded metal mesh is versatile and used in various applications such as security fencing, walkways, grating, filtration, enclosures, and architectural elements.
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