Chinese Government Reiterates Stance on Property Curbs as Tension Grows

As tensions rise between local Chinese authorities and central government over the property curbs, Premier Wen Jiabao has reiterated that China will continue with the curbs until housing is brought down to a reasonable price...

As tensions rise between local Chinese authorities and central government over the property curbs, Premier Wen Jiabao has reiterated that China will continue with the curbs until housing is brought down to a reasonable price.

Speaking at the opening of the annual parliamentary session Monday Jiabao said:

"We will strictly implement and gradually improve policies and measures for discouraging speculative or investment-driven housing demand, build on progress made in regulating the real estate market," said Wen when delivering his government work report at the Fifth Session of the 11th National People's Congress (NPC).

The government will also work to develop low-income housing, aiming to basically complete five million units and start construction on over seven million units, ensuring they are built to a high standard, he said.

In 2011 China vowed to build 36 million affordable homes by 2015. In 2011 it started construction on 10 million such homes, making it a doable target if all continues according to plan.

In recent weeks several local authorities have made attempts to tentatively ease back on the curbs, but in each case the central government has came down hard to ensure that the wall is quickly put back up so to speak.

The measures, which include increased down-payments, a ban on lending for third home purchases, trial taxes and more have now completely stopped price growth in the Chinese housing market as of January. Official National Bureau of Statistics data shows that in January prices grew in none of the 70 cities analysed. This is compared to last January when prices grew in 60 out of the 70 cities.

"The buying restriction is not likely to be abolished in a short term," said Guo Songhai, a professor with Shandong University of Finance and Economics, who expected the withdrawal to take place only with further improved government policies and a reasonable decline in home prices.

- Thursday 08 March 2012

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