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Property curbs to remain despite price drop

(China Daily)

10:22, November 10, 2011

BEIJING - Despite recent signs of homes getting more affordable, China's war against its stubbornly high property prices looks set to be a long one, as the government has repeatedly pledged to continue its market curbs until it comes to a "reasonable" level.

Chinese Premier Wen Jiabao again voiced determination to tame the country's housing costs earlier this week, after nearly two years of trying to cool the property market.

"I want to especially emphasize that there will not be even the slightest faltering in the property market curbs," Wen said in a speech during his trip to Russia over the weekend.

He said the government aims to bring real estate prices down to a reasonable level while promoting healthy, sustainable development for the industry. To do this, the Chinese government has so far employed a number of policies, including limits on the number of homes that people can own, higher down payments, the introduction of a property tax in some cities and the construction of low-income housing projects.

This is the third time within in a month that Wen has spoken of continued efforts to cool the market, and it comes at a time when Chinese developers, desperate to reduce the size of their inventories, have finally begun to cut prices to court buyers.

In late October, during an inspection tour and at a State Council executive meeting, Wen repeatedly stressed that the government will unswervingly continue its property-market tightening measures.

Zhou Xin, president of the Shanghai-based E-house China Research and Development Institute, noted that the government's rhetoric has shifted from "curbing excessive growth in property prices" to "bringing prices down to a reasonable level."

"This is a key adjustment," he said.

China's real-estate industry has just begun a nationwide price cut, led by the nation's top developers such as Vanke and Evergrande. In Shanghai, China Overseas's 30-percent discount on group sales has caused fury and protests among its existing homeowners.

Chen Guoqiang, vice chairman of the China Real Estate Society, said the government's stance indicates the current tightenings on the property market are not likely to change, which will result in continued expectations of lower prices and fundamentally decide the market trend.

"'Reasonable' refers to a price level that can be accepted by the general public, and the price-to-income ratio should not stay high," Chen said.

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