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Govt to investigate real estate curbs

By Zhao Qian (Global Times)

08:46, July 31, 2012

The State Council began to dispatch eight teams to investigate implementation of national real estate curbs in 16 major provinces and cities this week, a move that analysts said had been prompted by the recent rebound in home prices.

One of the investigation teams arrived Monday in Guangzhou, capital of Guangdong Province, sources were quoted as saying by the Southern Metropolis Daily.

The State Council released a statement on its official website on July 25 about its decision to start the investigations, although without disclosing an exact timeline for them.

These investigators will look into how well different mortgage policies have been executed, such as lower interest rates for first-time buyers and higher rates for second-time buyers, and how well home purchase limits have been implemented, according to the statement.

"The move by the central government is intended to find out major causes of the recent slight recovery of the property market," Zhang Dawei, research director at the Beijing office of Centaline China Real Estate, told the Global Times.

Twenty-five out of 70 major cities saw home prices rise in June, compared with a decline in 21 of the cities, the National Bureau of Statistics reported on July 18. It marked the first time since September 2011 that the number of cities reporting price rises exceeded that of cities reporting declines.

Zhang said loosened credit liquidity that led to a rise in loans offered to the property sector may be the main cause of the slight rebound.

By the end of June, real estate sector outstanding loans - including loans to developers, mortgages and securitized real estate loans - totaled 11.32 trillion yuan ($1.78 trillion), a 10.3 percent year-on-year increase, according to the central bank.

"One of the major obstacles to the execution of the real estate curbing policies comes from local governments, who have complex relations with the developers as they benefit from each other," said Chen Guoqiang, deputy director of the China Real Estate Society.

But Chen noted that a stronger rebound of the property market "is unlikely," because the developers still face the pressure of capital shortage, and their inventory of new apartments is still huge.

It will be impossible for the central government to loosen the nation's current property control policies as no sign of a dramatic real estate cooling down has yet been seen, according to Chen.

Local governments of 30 cities have slightly loosened property policies, which was another cause of the market recovery, said Li Yuan, research director at Centaline China Real Estate.

China will continue to maintain its policies and consolidate previous achievements to prevent a home price rebound, and local authorities must strictly implement the country's curbs, according to a notice jointly released by the Ministry of Land Resources and the Ministry of Housing and Urban Rural Development on July 19.

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