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Restrictions on buying houses to be kept tight

By Feng Jianmin (Shanghai Daily)

08:14, December 26, 2012

CHINA will extend purchase restrictions on housing and maintain its tight credit and tax policy on multi-home buyers next year, the Ministry of Housing and Urban-Rural Development said yesterday.

Differentiated credit and tax policies and purchase restrictions should continue in order to curb speculative and investment demand in the housing market, Minister Jiang Weixin said at a Beijing conference.

He said the government will speed up work to expand property tax trials beyond Shanghai and Chongqing.

However, the country will support end user and home improvement demand, and will start building 6 million affordable housing units and complete 4.6 million such units in 2013, Jiang said, according to Xinhua news agency.

His remarks came after more cities recorded a rise in home prices in November, and met market expectations that controls on the property market will be stable next year with no loosening of home purchase restrictions.

The rules that limit every local household to buy two housing units and confine every non-local family to just one were introduced in January 2011.

"Recent rebounds in sales and home prices driven by end-users and improvement demand will not lead to a significant revival," said Xiong Tian'en, a consultant with BOC International.

"The government will not loose restrictions on home purchases and mortgages, which are the most effective controlling measures against speculation."

He said supply was still larger than demand despite a recent sales recovery.

Excluding government-funded affordable housing, prices increased in November in 53 of the 70 cities tracked by the National Bureau of Statistics, compared with 31 in September and 35 in October. Prices were flat in seven cities while the remainder registered a decline.

Property developers listed in Shanghai and Shenzhen stock exchanges surged yesterday on speculation the housing market will improve mildly next year without the government introducing more strict measures.

A gauge tracking Shanghai-traded developers jumped 4.1 percent to the highest close since July 2011. China Vanke Co, the nation's biggest listed developer by market value, surged 6 percent to 10.12 yuan at the close of Shenzhen trading.

Shanghai-listed Gemdale Corp advanced 5.6 percent to 6.40 yuan, outperforming a 2.5 percent gain in China's benchmark Shanghai Composite.

Property market sentiment began to improve after monetary policies started to ease in the first half this year and China's top policy-makers considered urbanization as a main driver for domestic demand.

The government will "actively and steadily" push forward urbanization in 2013 for the sake of economic growth, according to a statement issued after the Central Economic Work Conference earlier this month.

Thomas Lam, director and head of research for Knight Frank's China operation, said yesterday that home prices in first-tier cities will grow by less than 5 percent in 2013, adding that those in second and third-tier cities could be under downward pressure.

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