China to manage troubled property sector at local level
Central authorities will put the onus on regional officials to deal with the sector as it seeks to prevent an abrupt slowdown or surge in prices
China will increasingly manage its troubled property sector at a local level as it seeks to avoid sparking either an abrupt slowdown that undermines the economy or another surge in prices, say government economists involved in policy discussions.
After increasing at double-digit rates for most of last year, home prices started cooling in late 2013 as a sustained campaign to clamp down on speculative investment and easy credit gained traction.
Annual growth in average new home prices slowed to an 11-month low in April, official data showed on Sunday. Existing home prices dropped from a month earlier in 22 of 70 cities in April, compared with 14 in March.
Data last week showed property sales dropped 6.9 per cent in the January-April period from a year earlier in terms of floor space, and fell 7.8 per cent in terms of value.
Authorities know a severe property crunch could worsen a build-up of debt, but also that a blanket easing of restrictions could set off another round of credit-fuelled house price rises.
"There is no sign that the central government will relax property controls on a nationwide scale even though the economy is slowing," said Zhao Xijun, deputy head of the Finance and Securities Institute at Renmin University in Beijing.
"The pressure is mainly on local governments, because some of their debts are maturing and they need to repay."