China must maintain its policy stance against property market speculation to drive money back into the real economy or else it faces the risk of home prices rebounding, senior government economists wrote in comments published yesterday in the official People’s Daily.
A range of government curbs slowed property transactions sharply in October and put a cap on housing price inflation but data released yesterday by the National Bureau of Statistics showed the value of homes sold last month climbed to 416.4 billion yuan (S$85.1 billion).
That is up 12 per cent from 372.3 billion yuan in October, when housing sales slumped 25 per cent, the first retreat in three months. The rebound in transaction volumes came as developers slashed prices to boost sales, according to SouFun, China’s leading real estate portal.
China’s home prices fell in 33 of the 70 cities monitored by the government in October, the worst performance since it expanded property curbs and scrapped the reporting of national average housing data this year. Last month’s price data will be announced on Dec 18.
Mr Ren Xingzhou, Mr Deng Yusong and Mr Xu Wei, researchers at the Development Research Centre run by China’s Cabinet, wrote: “Home prices in first-tier and some second-tier cities are still far beyond ordinary people’s actual affordability.”
“The tightening moves are at a critical period; we must stick to them. Relaxation will attract more funds into the real estate market, leading to a rebound in home prices, increasing inflationary pressure and negating all previous efforts,” they warned.
The government this year increased down-payment requirements and mortgage rates on some homes and imposed home purchase restrictions in about 40 cities to avert a housing bubble.
The researchers said if the tightening measures were extended, they expected real estate investment growth to slow to a more desirable pace of about 20 per cent next year from estimated growth of 30 per cent this year.
For the first 11 months of this year, investments in homes, office buildings, malls and other real estate climbed 30 per cent to 5.5 trillion yuan, the statistics bureau said yesterday. New property construction rose 21 per cent to 1.7 billion sq m. Home sales volume rose 7.5 per cent from a year earlier to 796 million sq m.
The economists’ views were echoed by Mr Wang Juelin, deputy head of research at the Ministry of Housing and Urban-Rural Development. He told the official Shanghai Securities News: “On home prices next year, I’m more worried about a rebound. Even any regional relaxation may have a nationwide impact on the results of tightening measures.”
“China will not and must not loosen the steps,” he said.
China can levy property taxes, which have only been launched so far in Shanghai and Chongqing on a trial basis, to replace the existing purchase restrictions in the long run, he said.
Source : Today – 10 Dec 2011