Home price rebound fuels concern over further tightening

15:51, December 02, 2010      

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Two months after the second round of real estate regulation and control measures were launched, the trade volume of houses decreased for a short period in many places, especially around Beijing. However, housing prices have rebounded to different extents recently.

Since real estate is still overheated, many industry insiders are concerned that a third round of control measures will most likely be launched. Zhao Xiao, a professor from the School of Management under the University of Science and Technology Beijing, said given the fact that demand still exceeds supply and excess liquidity remains, the probability that the housing price will decrease by a large margin is quite small.

In November, the housing prices of 23 real estate projects in Beijing rose by between 0.3 percent and 33 percent. According to the data from the China Index Academy, in the last week of November, the housing price of Shenzhen and Tianjin rose by 13 percent and 8 percent, respectively.

Regarding other cities, the housing transaction prices of Haikou, Kunming and Lanzhou increased by relatively larger margins compared to those of the previous week, and the margins are between 10 percent and 40 percent. In the last week of November, the housing transaction volume increased in 17 of the 35 cities being monitored.

"A clear housing price rebound like the rebound in September seems likely to appear again in the beginning of December," predicted Zhang Dawei, general research director of the Tertiary Market Research Department under Centraline Property Beijing.

Lin Lei, general marketing director of Century 21 China Real Estate, said that many fully-paid housing purchases in Beijing were caused by so-called inflation expectations.

Lu Keng, chairman of the Haier Real Estate board, is concerned that the third round of regulation and control is likely to be launched.

Zhang believes although the second round of regulation and control launched at the end of September 2010 implemented the most stringent policy, the effect is still not obvious. Turnover of the real estate market is still growing and the financial pressure of most developers is far from the edge of capital chain breaks. The regulation and control on the real estate market has reached the most critical period.

"If the real estate market rebounds again, the third round of regulation and control is also likely to be launched," Zhang said.

Cao Jianhai, a researcher from the Chinese Academy of Social Sciences, believes the Chinese government may have been ready for the third round of regulation and control, and it is now just waiting for the occasion, for example, the implementation of the house tax. Cao said that judging from the current situation, the house tax measure is likely to raise the tax rates based on the 0.3 to 0.4 percent of the trial tax rates. In addition, various government departments may further tighten the liquidity by means such as continuing to raise the interest rates.

By People's Daily Online


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