China's asset prices remain bubbling up

09:33, December 16, 2009      

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With house prices skyrocketing in China's cities, urban residents are finding themselves stripped of purchasing power, fanning likelihood of social unrest and prompting government measures to rein in run-away prices.

He Keng, an official with the Financial and Economic Committee of the National People's Congress, complained about the growing housing bubble in a CCTV interview over the weekend.

"If even a vice minister-level official like me can't afford a decent home, it will be a huge problem for most ordinary people," he said.

For the majority of the wage-earning public, the soaring prices have taken the dream of buying their own home further out of reach.

It also explains why a TV series called "Snail House," which reflects people's difficulty in affording a house, has been an instant hit. It has also become controversial, as it was called to a halt after only 10 episodes broadcast by Beijing-based BTV, reportedly due to pressure from real estate developers.

Noticing the smoldering public discontent, the central and local governments have been cautiously making small moves, trying to prevent the danger of an outpouring of anger that may jolt society as a whole.

Shanghai Mayor Han Zheng said last week that house prices in the municipality are rising too fast and could eventually harm the interests of the Shanghai people.

In southern China, the Guangzhou government has planned to release 80 square kilometers of land onto the market in order to curb soaring prices, local media reported Monday.

An executive meeting of the State Council, chaired by Premier Wen Jiabao, announced on Monday that the central government would rein in the overheated momentum of housing prices by increasing the supply of low-cost homes, curbing speculation and strengthening the supervision of the real estate market.

The stock market in Shanghai and Shenzhen saw real estate-related stocks falling across the board, some down 6-8 percent at closing Tuesday.

Nanfang Daily reported Tuesday that major institutional investors dumped a net 2.9 billion yuan ($424.6 million) worth of real estate stocks on the yuan-denominated A-share market last week, representing over 11 percent of the net fund outflow of the entire market, the highest among all the sectors.

However, analysts are not optimistic about the government's determination to take steps to control housing prices, saying that the government is at a dilemma in the face of growing social discontent and a recovering economy boosted largely by the real estate market and related industries.

"The government is riding on a tiger," a People's Daily senior editor, who asked to remain anonymous, told the Global Times. "It's dangerous to keep on riding, and even more risky to get off."

"Restraining home prices from soaring too quickly in recent months is the government's intention," Chen Guoqiang, director of the real estate research center at Peking University, said yesterday.

"But the government doesn't want the commercial real estate sector to fluctuate too much in 2010 because it needs to keep the real estate market booming to ensure the country's economy runs well," he said.
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