Beijing vows to rein in property speculation
Its planning agency aims to raise housing demand and supply of medium to low-cost property
Property bubble? China's housing prices have been rising since March, propelled by a slew of government measures, from lower mortgage downpayments to tax cuts.
(BEIJING) China will crack down on speculation in the property market and try to increase the supply of lower-cost housing, the head of the country's powerful planning agency was reported as saying yesterday.
The comments by Zhang Ping, chief of the National Development and Reform Commission, chimed with market expectations that Beijing could use targeted measures in the coming months to quell asset price rises without resorting to broader monetary tightening.
'Our country will improve housing consumption and macro-control policies, increasing the supply of mid to low-cost and price-controlled commercial property, and curb speculative house purchasing,' Mr Zhang was quoted as saying by the official Xinhua news agency.
The report did not provide any details about how the government might pursue these objectives.
The property sub-index in the Shanghai stock market ended 2.55 per cent lower, underperforming the main composite index's 1.73 per cent fall.
China's housing prices have been rising since March, propelled by a slew of government measures, from lower required downpayments on mortgages to tax cuts.
Nationwide prices rose by an annual 3.9 per cent in October.
Increases have been far more rapid in some cities. In the southern boomtown of Shenzhen, prices have soared 13.8 per cent during the same period.
While the government has welcomed a surge in the construction sector, an important pillar of the economy, some officials worry that property development is outstripping end-user demand in some locales and that prices are not affordable for ordinary citizens.
At China's key annual economic planning meeting, which ended on Monday, its top leadership said an objective for next year would be to develop smaller urban areas and support demand for 'normal' housing.
'We think this will further encourage local governments to continue the housing construction boom, which will support China's commodity demand,' Tao Wang, an economist with UBS in Beijing, said in a research note this week.
'We also expect the current preferential interest rates and other policies for housing purchases to largely remain in 2010,' she added. -- Reuters
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