China demands property cooling policies be enforced
Local governments must implement measures to bring down home prices, State Council says
The State Council on Friday released guidelines instructing local governments to strictly follow policies introduced to cool the mainland's housing market.
"It's now a crucial period for implementing measures on the housing market, as flat prices are expected to post stronger increases," the State Council said in guidelines dated February 26.
The directives include asking authorities to curb speculative activities in the home market by, for example, strictly implementing the government's 20 per cent tax on property reselling.
Banks are also requested to adhere to the mortgage loan and interest rate requirements for first-time homebuyers, as well as asking second-home buyers for higher down payments and interest rates in cities where prices have surged rapidly.
Officials have been asked to keep prices stable and increase the supply of mass private housing, according to the circular.
Last week, Premier Wen Jiabao said prompt home-purchase restrictions should be imposed in cities that had "excessively fast" price growth, according to a statement after the last State Council meeting he chaired.
"It sends a clear message to the market that if average home prices rise rapidly, the government will be forced to introduce more tightening measures to cool the property market," said Alan Chiang Sheung-lai, the head of mainland residential property at consultancy DTZ.
The guidelines came as the China Index Academy, an affiliate of the country's biggest property website SouFun, said new flat prices rose for the ninth consecutive month in February, up 0.83 per cent from January. The average price of new homes in 100 mainland cities the academy monitored rose to 9,893 yuan per square metre last month.
Year on year, home prices rose 2.5 per cent in February, representing an increase for three consecutive months.
Seventy-four of these cities posted a month-on-month increase in new home price in February, compared to 26 cities where prices of flats on the primary market declined.
"It is not only on the primary market. Secondary flat sales and prices have climbed too due to strong demand from end-users," said Lai Kwok-keung, the chief executive of property agency Centaline's China division.