Anyone hoping that the Chinese government was easing in its valour against rising housing prices has had the stuffing knocked out of them in the past few days. As the government's restrictions on the housing market began to not only bring down housing sales and prices, but the economy also started to slow, many people believed the government would start easing up. A positive month for sales in May along with reports that the government seemed to be effectively turning a blind eye to several local authorities easing of the restrictions, strengthened this optimism.
Government figures released this week showed June to be another positive month for prices, with growth in more cities than falls fuelled by the interest rate cuts aimed at the wider economy. On Friday before releasing the figures the government said that the restrictions are at a "critical" stage with increasing uncertainties in the market.
Straight from the horses mouth - a statement the Ministry of Land and Resources said that the land, resources and house construction authorities at all levels must be clear-headed about that, keep controls on the property market tight... and resolutely prevent housing prices from rebounding. It also said that local authorities must also revoke any loosening they have already imposed.
Since there was any talk of the government turning a blind eye, several statements from high ranking government officials including Premier Wen Jiabao himself have stated their continued commitment to maintaining the curbs, but this is the first time they have actually come out and told any authorities that may be easing up, to clamp back down again.
The Chinese economy is such a massive machine today, one can only hope that they know what they are doing, and don't bring any catastrophes for the rest of the world economy. Meanwhile investors can look to profit from the millions of social housing projects planned to bring the housing market back from the brink.
- Wednesday 25 July 2012