• Tuesday, October 06, 2015

Despite housing rebound, China sticking to tight measures: forum

Xinhua 2012-08-12 16:35 (GMT+8)
Some experts agree that the realty sector in first and second-tier cities has stabilized following China's tighter measures. (Photo/Xinhua)

Some experts agree that the realty sector in first and second-tier cities has stabilized following China's tighter measures. (Photo/Xinhua)

A recent rebound in China's home prices will not continue, as the country will not ease its property tightening measures for the sake of economic growth, experts said at an industry forum held in south China's Hainan province from Thursday to Saturday.

The consensus was made by analysts and industry insiders at the Bo'ao Real Estate Forum held in the city of Bo'ao.

The government's tightening measures, implemented in 2010 to bring home prices down, have included restrictions on home purchases in several cities, higher down payments and property taxes.

The measures have shown preliminary results. However, sales volumes and prices for homes in many first- and second-tier cities have started to climb, triggering speculation about what the government will do next.

Experts said the increase is temporary and that the central government will maintain its controls, despite its stated intention to stabilize economic growth amid the current downturn.

Real Recovery?

Data from the China Index Academy showed that average home prices in 100 cities edged up 0.33% in July month on month, raising fears of a new price surge. Many factors have caused the prices to go up, according to Zhu Zhongyi, vice president of the China Real Estate Association.

"Property giants like Vanke and Evergrande took the lead in lowering prices, which encouraged many companies to boost their own sales by providing discounts," Zhu said. The property market also got a boost from the central bank, which cut the benchmark interest rate twice in June and July, respectively, to buoy the slowing economy, Zhu said.

"We should be aware that although home sales and housing prices have been climbing steadily by the month, new property investment, construction projects and land purchased for property development have all shrunk on a year-on-year basis," he said.

Zhou Weijun, executive vice president of real estate giant Vanke, said demand that accumulated before the controls were put in place, as well as eased loan restrictions for first-time buyers, were the main causes of the price spike.

Real estate companies should be prepared for harder times ahead, as the market will still struggle to achieve balance in the next several months, said Liu Xiaoguang, general manager of the Beijing Capital Group.

"Although first- and second-tier cities have been witnessing a recovery, third-tier cities remain in a downturn," said He Jianbo, general manager of Minmetals Land Limited, a real estate development company and subsidiary of Hong Kong's China Minmentals Corporation.

Long-term control

China's economy expanded 7.6% year-on-year in the second quarter, slowing from 8.1% in the first quarter. The growth marked the sixth consecutive quarter of decline, indicating increased pressure for the government to stabilize economic growth.

However, Liu said curbs on the property market will not be loosened for the purpose of stimulating growth, as China's cabinet has strengthened its supervision over the implementation of measures by local governments.

The government has lowered the expected economic growth rate for the year to 7.5%, creating space for property sector curbs, Liu said, adding that the figure demonstrates the government's determination to maintain its controls.

Qin Hong, director of the Center for Policy Research under the Ministry of Housing and Urban-Rural Development, said the central government intends to curb property speculation and increase supplies of affordable housing and ordinary commodity housing.

"Bringing housing prices down to a reasonable level is the short-term target, but our long-term goal is to build an effective, healthy and orderly property market," Qin added.

Zhou said housing prices are not only an economic issue, but also a political one, since they are closely related to people's livelihoods.

Experts said they expect some developers to turn to commercial and tourism-related property to decentralize market risks as the regulations continue to take effect.

"China's property market has entered a transformative period," Qin said.

Chen Huai, director of the Institute of Urban-Rural Development of China, said urbanization and a changed consumption structure can ensure the long-term development of the economy. "The real estate sector will have a lot of opportunities for development during the next 20 years with the deepening of China's urbanization," Chen said.

Renowned economist Fan Gang, director of the National Economic Research Institute, said the curbs have already achieved success. Housing prices in first-tier cities that had surged before 2010 have been tamed by the regulations, Fan said, adding that the decision to refrain from implementing the policies in smaller cities has helped avoid a nationwide property bubble.

During the last two years, housing prices have remained at roughly the same level, while average per capita income has increased by more than 10% year-on-year, which means that housing prices have already lowered in comparison to the average income, Fan said.

The Bo'ao Real Estate Forum, first held in August 2001, is the Chinese real estate industry's biggest professional gathering. This year's forum attracted over 1,000 real estate developers and experts.

Who`s who »
Zhao Zhengyong (趙正永)

Zhao Zhengyong is the party secretary of Shaanxi province. A native of Ma'anshan in Anhui province, he was born in 1951 and joined the Communist Party in 1973. Zhao graduated from the Central ...