THE credit squeeze and other financial measures introduced by Chinese Vice-Premier Zhu Rongji to cool down the economy have taken their toll on the mainland property market, says a Hong Kong expert.
Billy Ho, director of the China and Investment Department at Jones Lang Wootton, said oversupply and the lack of a secondary market had also led to price falls in many areas.
Mr Ho told Hong Kong Industrialist, an official publication of the Federation of Hong Kong Industries, that money from mainland banks and financial companies was drying up.
He said: ''Banks and financial companies couldn't support their clients as much as they wanted due to the financial reform measures.
''A lot of developers and investors working on projects suddenly found themselves with liquidity problems.'' Administrative measures, such as tightening controls on approvals for land grants, were threatening the development of the property market, he said.
The government was also cracking down on those who bought large tracts of land for speculative purposes, bringing to light further irregularities in the transfer of land and the contractual processes which have dogged the Chinese property market.
Mr Ho said: ''There are a lot of pitfalls in the entire real estate system - you can't rely on the same land system or conveyancing law or even the general principle of getting land-use rights being applied to every city in China.'' Many foreign companies were reluctant to invest in an uncertain environment with many grey areas, he said.
