Tight housing policies here to stay: official

08:27, August 16, 2010      

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The State Council's tightening measures must be carried on to fight housing speculation, said China's vice premier Li Keqiang during his visit to affordable housing projects in Beijing over the weekend.

  Four months after the State Council's decree on tightening bank mortgages for housing investment, more detailed measures are expected to be implemented.

  The Ministry of Housing and Urban-Rural Development is planning to provide the China Banking Regulatory Commission a blacklist of property developers that are considered to be stockpiling houses or violating regulations for sales, China Business News reported Saturday citing unnamed government officials.

  Banks will restrain the lending or financial support to those developers on the blacklist, according to the regulator.

  Despite the tightening measures announced in April and the drop of transaction volumes, the housing prices of major cities such as Beijing, Shanghai and Guangzhou, have not yet started to fall.

  In July, the average housing price of 70 medium- to large-sized cities increased by 10.3 percent year-on-year, though down 1.1 percentage points than June, but still rising, according to the National Bureau of Statistics.

  The 30 property developers listed on the stock market reported a total net profit of 5.68 billion yuan ($836.02 million) in the second quarter, up 25 percent over the first quarter.

  The big four developers: Vanke, Poly, China Merchants Property Development, and Gemdale all reported substantial increases in their net profits for the first half of the year.

  Fearing a fall in prices, the China Real Estate Association (CREA) is reported to have petitioned the State Council several times to slow down new tightening property policies.

  The declining transaction volume and the inactive purchase of land may cause big problems in the first half of 2011, the 21 Century Business Herald reported Friday citing Zhong Zhongyi, vice president of the association.

  The association represents the interests of the industry, which means that the industry is already under the pressure,. Hui added that smaller property developers might have weaker cash flow.

  "The declining transaction volume will eventually lead to a price drop," Hui estimated that the price drop could be 10 to 20 percent. As long as the current policies are well implemented, the effect will show, he said.

  According to an online survey of sina.com, 88 percent of the respondents opposed against CREA's proposal, 87.5 percent of the respondents are not satisfied with the government's measures.

Source: Global Times


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