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Home prices hit turning point, start to drop (2)

By Ye Xiaonan (People's Daily Overseas Edition)

08:21, November 10, 2011

Leading real estate developers, including Vanke, have substantially lowered prices, signifying that the regulatory measures, including housing purchase limits, have produced effects and effectively curbed housing investments and speculation. As long as the housing purchase limit policy remains unchanged, housing prices will return to their original levels.

Adhering to real estate control measures

Industry insiders noted that this is a crucial time for the central government to strengthen rather than to slacken its efforts in curbing property prices.

"The central government should adhere to its real estate control measures despite mounting pressure and uncertainty," said senior financial analyst Yu Fenghui.

Maintaining steady economic growth has long been a primary task for the Chinese government, and any control measure targeting the real estate sector, which is a traditional driving force behind economic growth, is subject to strong criticism and enormous pressure.

Furthermore, the property control measures have reduced local governments' gross domestic product as well as their revenue from land sales and property taxes. Overall, the central government is under great pressure from local governments, developers and early speculators to loosen property controls.

Ma said that whether housing prices will rebound depend on the central government's adherence to its property control measures. The central government should not ease home purchase restrictions unless an effective alternative is found. Once home purchase restrictions are eased, housing prices may get out of control again.

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