China to maintain curbs on property market

BEIJING: China will maintain restrictions on the property market, vice-premier Li Keqiang has said, despite growing speculation that curbs could be eased to prevent a damaging slump in prices.

Real estate sales and prices have been falling nationwide due to tough restrictions on purchases and bank lending, fuelling fears that the market could collapse and send debt-laden property developers to the wall.

China’s property market was “in a key stage” and restrictions needed to stay in place to “promote the healthy development” of the sector, the official Xinhua news agency quoted Li as saying on Sunday.

“We must maintain policies to prevent property prices from rising overly fast and further consolidate the results of the controls,” Li said.

China has introduced a range of measures aimed at bringing down property prices the last year, such as bans on buying second homes in some cities, hiking minimum down-payments for buyers and introducing property taxes.

A surge in bank lending in recent years has fuelled investment in the real estate sector and pushed property prices out of the reach of many ordinary Chinese, angering people struggling to buy their first home.

The government would maintain restrictions and step up construction of low-cost housing to “satisfy the multiple and diversified housing needs of the public,” Li said.

Li’s remarks echoed those of Chinese Premier Wen Jiabao, who recently said house prices should return to “reasonable levels” before policies were eased.

Renmin University in Beijing said last week it expected the government to relax some property market curbs next year due to concerns that slumping prices could hurt growth in the world’s second largest economy.

Cash-strapped local governments were heavily reliant on revenue from land sales, and the central government would likely intervene to prevent property prices from falling more than 25%, it said in a report.

Property investment was also a contributor to economic growth, so Beijing might act to help ensure gross domestic product growth – which creates jobs and prevents social unrest – remained strong, it said.

Official data showed the number of major Chinese cities posting a drop in home prices doubled to 34 in October from September, in a sign efforts to cool the country’s surging property market are working.

By AFP