ST : China takes fresh steps to rein in property prices

27 Jan 2011,
China takes fresh steps to rein in property prices

BEIJING: China yesterday raised the minimum down payment on second homes and ordered the authorities to rein in property prices in its latest move aimed at quelling public angst about high real estate costs.

The State Council - China's Cabinet - ordered that the minimum second-home down payment be hiked to 60 per cent of the property's value. Just last April, it ordered the payment raised to 50 per cent as the government fought to curb skyrocketing property values and real estate speculation.

The State Council also said cities that had seen especially fast property price increases must draw up and implement measures to limit real estate sales.

China's government has issued a raft of measures recently to curb spiralling prices, as polls have shown the difficulty in affording housing has become the top consumer fear.

Inflation and disputes over land have a history of sparking unrest in China.

However, property prices in China's major cities have continued to increase, posting their fourth straight month-on-month rise in December as sales picked up pace.

The State Council reiterated an order it issued last year that mortgage loan rates on second-home purchases must be at least 10 per cent higher than the central bank's benchmark lending rates.

It also told the authorities across the nation to increase the supply and availability of affordable and public housing, and use a range of tax, land-use and other policies to put the brakes on land speculators.

Those found violating any measures aimed at tackling price spurts must be 'severely' dealt with, it said.

Whether the new move will work remains to be seen, as property experts put out a report in Beijing citing data to prove that prices are likely to rise further this year.

The findings echo a report issued last week by the Chinese Academy of Sciences, which predicts property prices will rise 12.77 per cent this year.

December home prices in 70 major Chinese cities rose 0.3 per cent month-on-month and 6.4 per cent year-on-year, the National Bureau of Statistics said on Monday.

Also, according to reports, China's top 10 property developers have shifted their sights to investing in second- and third-tier cities after cooling measures in big cities such as Beijing and Shanghai shaved their profit margin.

As home buyers and speculators follow on their heels to these cities, such as Changchun and its otherwise little-known neighbour, Tonghua, in north-eastern Jilin province, property prices in these places will soon rival those of first-tier cities, reported the Chinese media.

AGENCE FRANCE-PRESSE, CHINA DAILY/ASIA NEWS NETWORK