China may ease property curbs next year: Varsity report

China may ease property controls in the second quarter of next year due to concerns a steep drop in prices will push economic growth below 9 per cent – an unspoken but key target for Beijing, a prominent Chinese university said in a report published yesterday.

Property prices, transactions and investments will fall in the first quarter due to the tightening measures, a Renmin University of China report published in the state-run China Securities Journal said. However, the likelihood of a market collapse is slim.

“Given local governments’ high reliance on land sales for fiscal revenue and the 9 per cent bottom line for China’s economic growth, the correction in the property sector won’t exceed 25 per cent,” the report said.

“Local governments are likely to take numerous easing measures in the second quarter of 2012, while in the following quarter the central government may gradually loosen restrictions on credit and home purchases,” it added.

China has launched a raft of measures since April last year to curb property prices. Government data released last Friday showed average property prices in 70 Chinese cities posted their first monthly decline since the cooling campaign, suggesting the start of a much-anticipated price correction that could help officials tame housing costs.

During a visit to Russia earlier this month, Premier Wen Jiabao reiterated that the government would not waver on its tightening measures and pledged to bring prices down to a reasonable level.

Source : Today – 22 Nov 2011

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