International Property

Wen pledge to keep property market curbs

PUBLISHED : Sunday, 08 July, 2012, 12:00am
UPDATED : Sunday, 08 July, 2012, 12:00am

Premier Wen Jiabao reaffirmed the need for government measures to restrain the mainland's property market yesterday.

He spoke amid expectations that back-to-back interest rate cuts could signal a policy shift.

On a visit to Changzhou, Jiangsu province, he said the government would not relax its two-year-old campaign to curb speculation and bring down prices in what was widely seen as an overheated property market.

'It is a crucial time for the controls over the property market,' Wen said, according to Xinhua. 'The controls have to be continued. And it will be long-term policy to curb speculation in the property market.'

Anticipation of a policy change intensified on Thursday, after the People's Bank of China announced its second rate cut in a month. It lowered the one-year lending rate by 0.31 per cent to 6 per cent, and the one-year deposit rate by a quarter of a percentage point to 3 per cent.

Property shares rose as investors saw a change in property policy as increasingly likely.

Shares in Shenzhen-listed China Vanke rose 3.88 per cent to 9.65 yuan (HK$11.84) on Friday, while China Overseas Land and Investment shares rose 4.83 per cent to HK$19.12.

But Wen said policies to restrict home purchases, limit speculation, rein in mortgage lending and increase property taxes would stay in place. He added that the central government would also prevent any efforts by local governments to relax controls over the property market. 'Property prices have to come back to a reasonable level,' Wen said. 'We can't let the property prices rebound.'

Central government would also attempt to steer developers away from their focus on luxury residential developments and encourage them to build more mass residential housing, Wen said.

To serve potential buyers with lower incomes, the government would continue to increase the supply of subsidised housing. There are 4.7 million subsidised homes under construction and 2.06 million have already been built.

Alan Chiang Sheung-lai, head of mainland residential property at property consultant DTZ, said the premier was trying to avoid investors harbouring false hopes.

'Many people saw two rate cuts in a month as a signal that the government was relaxing the controls over the property market,' Chiang said. 'However, the statement by the premier shows that the government has no plans to do so.'

The central bank's interest-rate cut appeared intended to help sectors other than property, such as small and medium-sized enterprises. Chiang said. Since the cooling measures will continue, he believes developers will release more mass residential projects for sale.

Professor Eddie Hui Chi-man, of Polytechnic University, said Beijing's commitment to the cooling measures, and speculation that the US Federal Reserve could begin a third round of 'qualitative easing' stimulus, could spur an influx of mainland investors to the Hong Kong property market.

Meanwhile, Hong Kong Financial Secretary John Tsang Chun-wah said there could be turbulent times ahead and reiterated that people should think twice before making important decisions such as home purchases.

'People should be cautious,' Tsang said. 'The interest rate is unprecedentedly low and it can only go up. One should also ask whether their jobs are secure. In fact, things can go out of order.'




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