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POLITICAL ECONOMY
China vows to curb real estate 'speculation'

Surging Chinese property prices stoke bubble fears
Beijing (AFP) Dec 10, 2009 - Property prices in Chinese cities rose at the fastest pace in 16 months in November, the government said Thursday, amid growing concerns about bubbles building in real estate. Property prices in 70 medium and large cities rose 5.7 percent in November from a year ago, the biggest jump since July 2008, figures from the National Bureau of Statistics showed. It was the sixth successive year-on-year increase following a slump dating from December last year when the government attempted to rein in runaway prices and as the global economic crisis kicked in. After trying to cool the market a year ago, Beijing this year responded to the economic crisis with tax breaks and other measures to prop up the property sector, which accounts for more than 20 percent of urban fixed investments.

But concerns are rising that bubbles are building in real estate due to rampant speculation. The house price-to-income ratio -- the ratio of the median market home price and the median annual household income -- is expected to hit 8.3 in China this year, the Chinese Academy of Social Sciences said in a report on Monday. A rational range is between three and six, the think tank said. In response to mounting public complaints about excessively high house prices, the government said this week it would curb speculative home purchases next year -- possibly by restricting bank loans to the sector. In policies announced this week, Beijing said sales of homes by individuals will be exempt from paying tax only after at least five years of ownership, instead of two years previously.
by Staff Writers
 Beijing (AFP) Dec 14, 2009
 China said Monday it would curb "overly fast" real estate price rises that have raised fears of a property market bubble with more low-income housing, redeveloping slums and halting "speculative" buying.

A statement issued by the State Council, or Cabinet, said it would bring the market in check by "strengthening market supervision, stabilising market expectations and keeping the overly fast momentum of price increases in some cities within limits".

The order, issued after a meeting of the State Council chaired by Premier Wen Jiabao, comes amid rising concern that a programme of huge public spending and easy credit was helping fuel a property market bubble.

Property prices in 70 medium-sized and large cities in China rose 5.7 percent in November from a year earlier, the fastest rate in 16 months and the sixth consecutive monthly on-year increase, the government said last week.

The boom has been bolstered by easy bank loans, tax breaks and a lower down-payment threshold, introduced by the government in the past year to support the real estate sector, a key driver of China's economic recovery.

The State Council statement said the government would "restrain speculative housing purchases".

It gave no specifics on policies that would support the new push.

However, it said it planned to ramp up supplies of cheap public housing, "aiming to basically solve the housing problems of 15.4 million low-income families".

It would also push the redevelopment of shanty towns, particularly around state-owned industrial and mining operations, that it said house about 10 million families.

It would do so in part by encouraging banks to lend for urban redevelopment, and by waiving some taxes for certain projects.

Concerns have risen in recent months that a property bubble was building due to speculative investment amid rumours that a large portion of the government's 586-billion-dollar stimulus package had been channelled into asset markets.

The package was first announced late last year in response to a domestic economic slowdown linked to the global downturn.

The meeting called on local governments to "take specific measures to promote the healthy development of the real estate market", giving no more details.

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