Wen Jiabao

Beijing pushes on for price fall

PUBLISHED : Tuesday, 06 March, 2012, 12:00am
UPDATED : Tuesday, 06 March, 2012, 12:00am


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Premier Wen Jiabao yesterday reaffirmed the central government's determination to continue implementing measures to push home prices back to a reasonable level.

'[We'll] strictly implement and gradually improve the policy measures that curb housing demand from speculators and investors so as to further strengthen our success in regulating the property market,' Wen told the National People's Congress yesterday.

He said investment-driven and speculative activities dropped significantly last year as the government intensified efforts to regulate the property market. Home prices in most cities recorded declines quarter on quarter.

Wen said about 10.43 million housing units were built for the lower income group last year.

The government aimed to complete five million units and begin the construction of more than seven million units this year.

'It shows Beijing will continue its property measures in the foreseeable future, for at least six months or longer so as to bring prices back to normal,' said David Ji Yanxun, the head of greater China research at property consultancy DTZ.

'Property regulations have made some progress so I don't think they will be relaxed very soon.

'At the same time, the government wants to increase the supply of affordable flats to meet the strong housing demand from the lower end of the market. This will help to bring prices down to a reasonable level.'

Since 2010, the central government has implemented controls ranging from limits on home purchases to higher lending rates and higher downpayments to cool the market.

Although some local governments, heavily reliant on the property industry for revenue, tried to relax certain restrictions, they had to back down after the central government orders the curbs to stay in place.

Data from the National Bureau of Statistics shows new home prices in 70 major cities ceased to surge in January. China Overseas Land & Investment's chairman Kong Qingping said the company was now seeking to expand to the United States and European markets and was hoping to get the government's approval.

Kong said this was the best time to buy commercial properties in these markets because prices there had dropped by about 50 per cent from their peaks, but rents had not fallen significantly.

With a yield of about 4 to 5 per cent, it was an attractive investment, he said.

The company is looking for properties in core locations in the US, Britain and other parts of Europe, as well as in Taiwan and Southeast Asia for long-term investment.

On the mainland market, Kong said flats in the suburbs might see a more significant price drop than those in urban areas.

He added that in some places, prices had dropped to between 15,000 yuan (HK$18,400) and 17,000 yuan per square metre from about 30,000 yuan.

Shui On's chairman, Vincent Lo Hong-sui, said it would be a tough year for the mainland property market.

Lo said home prices would continue to drop and might hit bottom in the last quarter.

However, he said prices in city centres were more resilient and less susceptible to price drops.