Beijing urged to keep its foot on property brake

PUBLISHED : Saturday, 10 December, 2011, 12:00am
UPDATED : Saturday, 10 December, 2011, 12:00am


A top government think tank says the mainland should continue to impose strict austerity measures to curb property price growth, and suggests a 'soft landing' in the real estate market could be achieved next year.

A housing green paper issued by the Chinese Academy of Social Sciences says the central government's moves to rein in the red-hot property market have taken effect, but the policies should stay in place.

'A soft landing in the property market will be achieved next year but the government should continue the policy stance against property speculation,' it said.

Property sales have slumped by more than half across the nation, prompting developers such as China Vanke, China Overseas Land and Investment and Longfor Properties to cut prices by 20 to 40 per cent to raise cash.

China Overseas Land and Investment (Coli) on Thursday said its contracted sales tumbled by 48 per cent to HK$3.5 billion last month from October.

In terms of floor area, the developer sold half as much space, or 271,000 square metres last month.

But for the period from January to last month, Coli said contract sales had reached HK$81.57 billion, beating its HK$80 billion annual target.

Longfor on Thursday announced its contracted sales dropped 29 per cent to 3.1 billion yuan (HK$3.78 billion) last month, compared to 4.38 billion yuan in October. However, the developer said it had pulled in 35.64 billion yuan for the first 11 months of this year, up 28.6 per cent from the same period last year.

Investors reacted negatively to the news austerity measures were likely to to continue, with shares of China Evergrande losing 6.99 per cent to HK$3.19; Coli dropping 4.05 per cent to close at HK$13.74; Country Garden sliding 4.96 per cent to HK$2.87 and Agile Properties declining 4.55 per cent to HK$6.28.

Analysts said a sharp contraction in property sales and the tight credit environment would undermine the industry's fixed-asset investment.

According to data released by the National Statistics Bureau of China yesterday, fixed-asset investment in urban areas rose 24.5 per cent in the first 11 months of the year, compared with the same period last year.

The growth rate was slightly slower than the 24.9 per cent recorded in the first 10 months of the year.

'Policy easing has thus become more likely,' said Dr Liao Qun, senior vice-president and chief strategist for the China banking group at CITIC Bank International.

Despite the intensified economic slowdown, Liao said that a hard landing for the mainland's economy remained unlikely.