Mainland property market could see fresh round of regulations
State Council review of enforcement of market curbs raises the prospect of new regulations being imposed
The mainland property market may face another shake-up following the completion last week of checks by the State Council on whether provincial and city governments have been strictly enforcing controls ordered by the central government.
Governments in some areas have tried to ease restrictions because of dwindling revenues from land sales. Their actions have heightened expectations that Beijing is poised for a crackdown.
The State Council said last month it would check how effectively the measures were being implemented in 16 provinces and cities, including Beijing, Shanghai, Tianjin and Chongqing.
The teams were reported to have completed their inspections last week, and a report in the Shanghai Securities News said the central government had criticised some administrators for not adhering strictly enough to curbs and policies.
Analysts are divided on how Beijing will react to the findings of the inspection teams.
One group believes additional controls will be announced as early as this month, while another thinks the recent growth in home prices and sales that prompted the inspections was unsustainable as economic growth is slowing.
"The central government will release some new measures but it is unlikely to come up with drastic policy," David Ji, head of research for Greater China at property consultancy DTZ said.
One possibility, he said, was that the government would announce measures to promote an increase in the supply of mass-market homes.
Measures to curb speculative investment demand would remain in place, he believed.
Home prices in 70 cities on the mainland snapped a nine-month losing streak to edge higher in June.
With the market due to enter its seasonal peak period for sales, Beijing has acted to nip renewed speculative buying patterns in the bud, analysts said.
According to the China Securities Journal, the inspection teams found that eight provinces had adopted effective cooling measures, but were critical of the provincial governments of Hunan, Hubei, Hebei, and Shandong for what was described as loose enforcement.
The report said that further curbs were likely in such cases, including raising the transaction tax on existing homes and expanding a property-tax trial.
Alan Jin, a property analyst at Mizuho Securities Asia, said he expected sales to remain strong for next month and October - the traditional peak season for mainland sales - although the number of transactions would not be much higher than levels reached in May and June.
Albert Lau, managing director of Savills China, said the government was caught in a dilemma.
"Beijing has to strictly impose austerity measures to prevent property prices from rebounding even though the nation is heading for an economic slowdown," he said.
Lau attributed the small pick-up in sales since May to the launch of new projects at a discount to prevailing market levels and two cuts to interest rates, and he doubted whether the buying momentum would be sustained.
"There has been no sign of crazy buying for the past couple of months," he said.