China to keep tight controls on property market

AP News
Posted: Jul 14, 2011 6:04 AM
China to keep tight controls on property market

China's premier says the government will keep controls on property deals in place to help fend off a speculative bubble, reflecting top-level unease over limited progress in cooling the overheated market.

Wen Jiabao urged local governments to abide by efforts to cool the property market and to meet targets for building more affordable public housing. Such housing is meant to accommodate ordinary families unable to afford commercial property due to surging prices.

"Pressure on housing prices in some cities is still strong, and in some places controls have been relaxed," a government statement cited Wen as telling a Cabinet meeting Thursday. "The current real estate market is at a critical period. We must unswervingly stick to controlling the trends," it said.

As of the end of June, construction had begun on more than 5 million units of public housing, more than half the annual target, the statement said.

State media say more than 30 million people are having trouble finding affordable housing, and developers have been lukewarm on investing in the relatively unprofitable part of the market.

Noting uneven progress and low use rates in some areas, Wen called for fair and equitable distribution of such housing and curbs on surging rents.

Investment in property rose by nearly a third over a year earlier in the first half of this year to 2.63 trillion yuan ($404.6 billion), according to data released Wednesday.

Despite 15 months of efforts to cool the housing market, prices remain firm, according to a recent report by Standard Chartered Bank, which surveyed the situation in both large cities and in smaller provincial cities.

The government has raised interest rates and bank reserve requirements, repeatedly. Some cities have also hiked the amount of money needed for downpayments and imposed restrictions on families' purchases of second and third properties. But prices are still rising, though at a slower pace.

China's economic growth slowed to a still-robust 9.5 percent in April-June, giving Beijing room to tighten controls to fight surging inflation, which hit a three-year high of 6.4 percent in June as food prices raced higher.

Such increases worry China's communist leaders as they erode public trust in their ability to continue deliver improving living standards.