Property curbs to stay

By Fang Yunyu Source:Global Times Published: 2012-9-23 23:50:03

The country's top housing regulator disclosed over the weekend that the authority will continue the current curbs on the real estate industry and said the home prices will not rebound nationwide.

"All local governments and agencies should unswervingly continue the property market controls, and resolutely curb speculative investment in housing…currently housing prices have not yet reached the conditions for a rebound nationwide," an unnamed official at the Ministry of Housing and Urban-Rural Development was quoted as saying by the People's Daily Sunday.

The official's remarks came after rising speculation that the country's home prices will soon rebound, as many cities have seen month-on-month price increases for a few months recently.

According to statistics released by China's leading property research organization the China Index Academy early this month, the average home prices in the statistical pool of 100 major cities rose to 8,738 yuan ($1,377) per square meter in August, a slight increase of 0.24 percent compared with a month earlier, marking the third straight month of price rise.

And in late July the State Council dispatched eight teams to investigate the implementation of the national real estate curbs in 16 major provinces and cities, a move analysts believed had been prompted by the recent rebound in home prices.

"The main reason why home prices have been rebounding recently is that the authority has tried to cool down the industry for quite a long time and the home demand accumulated over more than two years has exceeded supply, leading to the rise in prices," Yin Kunhua, a professor at the Real Estate Research Centre of Shanghai University of Finance and Economics, told the Global Times Sunday.

The country since 2010 began to implement cooling down measures in the overheated real estate sector, including restricting home purchases by non-local residents in major cities and raising down payment amount for multiple-home buyers.

Yin Bocheng, director of the real estate research center at Shanghai-based Fudan University, told the Global Times Sunday that it is necessary to continue the home price controls, because many speculative investors have been engaged in the industry for a few years, and they are still waiting for opportunities.

Both experts said they do not think the home prices will rise substantially any time soon.

"China's economy has been slowing down this year, and consumers' purchasing power has also been declining," said Yin Bocheng.

But professor Yin at Shanghai University of Finance and Economics warned that the government  tightening policy is one factor behind China's economic slowdown, and will hurt the country's development in the long run if the policy continues, as the real estate industry is an economic pillar for the country.

After two years of curbs on the property market, many property developers, which have been unable to sell their houses at good prices and to get financial help from banks, have found their financial status deteriorating, as evident by the fact that the combined debt of the country's 125 listed real estate developers surged to a record high of 1.33 trillion yuan in 2011, calculated by the real estate agency Centraline Property.

Professor Yin noted that local governments, which relied heavily on land sales as their major source of fiscal income, are under increasing pressure due to housing curbs, as well as other relevant sectors like steel and furniture industries.

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