Chinese Vice Premier Li Keqiang said measures introduced to control the nation’s property market are at a “critical stage” and that the government should maintain the curbs, the official Xinhua News Agency reported.
Li also called for increased efforts to construct and “fairly distribute” affordable housing to low-income families, Xinhua reported today. The vice premier made the remarks while visiting the city of Langfang in Hebei province on Nov. 25, where he checked on the implementation of the government’s affordable housing policies, Xinhua reported.
The government intensified property measures this year with limits on mortgages and restrictions on home purchases in about 40 cities, as well as aiming to build 10 million affordable housing units to boost supply. Some brokerages including Barclays Capital Research and asset managers such as CBRE Global Investors had earlier forecast that falling home prices in cities including Beijing and Shanghai may prompt the government to roll back some of its tightening measures.
“We expect the government to continue its current purchase and credit restrictions instead of easing them soon, which should constrain property market activity in coming months,” UBS AG analysts Tao Wang and Harrison Hu said in a report dated Nov. 25, predicting a 10 percent decline in housing starts for the next 12 months. “The most important factor underlying this outlook is policy.”
UBS expects property prices to drop by 10 percent to 15 percent in first-tier cities next year, and by 5 percent to 10 percent in other cities, they wrote.
‘Firmly’ Maintaining Curbs
Premier Wen Jiabao said at the end of last month that the government would “firmly” maintain restrictions on real estate. Li is in line to replace Wen as premier next year, according to analysts including Willy Wo-Lap Lam, an adjunct professor of Chinese history at the Chinese University of Hong Kong.
China’s October home prices dropped in 33 of 70 cities monitored by the government, the worst performance this year.
The government is unlikely to reverse its monetary policy in the short term or ease curbs on the property market even as economic growth slows, according to Citic Securities Co. The central bank increased interest rates three times and the reserves ratio six times this year.
House prices in the more affluent tier-one and tier-two cities are likely to fall by 10 percent to 30 percent next year, exceeding losses in other cities as higher property prices limit affordability, Daiwa Capital Markets analysts Danny Bao, Yunye Lu and Alex Ye said in a report received today. Values may decline 5 percent to 15 percent in the less affluent tier-three and tier-four cities as more homes are owner-occupied, they said. corporate website designIT Support UK