China to extend housing curbs

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China's Ministry of Housing and Urban-Rural Development (MOHURD) has informed the local governments that they have to extend the housing purchase restriction policies after the expiry date, the Beijing News reported. Among the 46 cities that are conducting the policies, 10 cities' policies are to expire on Dec 31, 2011.

China's Ministry of Housing and Urban-Rural Development []

Last year, 48 cities issued restrictions on the number of homes a person is allowed to purchase to curb speculation and control rising prices. Thirty-six of the cities do not have expiry dates for the policies while 12, including Fuzhou, Xiamen and Haikou, set restrictions to end either by year end or in February.

The announcement partly dispelled uncertainties of whether China would continue the tight controls on the property market after the central government pledged to "fine-tune" macroeconomic policies to sustain growth and on concerns that falling home prices may hurt the economy.

But Premier Wen Jiabao said last month that the government will not waver on tightening measures and pledged to bring house prices down to a "reasonable level."

Lose-lose [By Jiao Haiyang/]

Lose-lose [By Jiao Haiyang/]

Xia Bin, a central bank advisor, said on November 30 that the government's "fine-tuning" remark does not necessarily mean that credit control will ease or that curbs on the property market will be reversed.

The International Monetary Fund warned last month that China's financial system could face risks if property prices decline sharply and bad loans increase.

"Local governments are not likely to ease their restrictions on home purchases after frequent emphasis by the central government against loosening," said Yang Hongxu, an analyst with Shanghai-based E-house China Research and Development Institute. "The central government will not call an end to the policies next year, but local governments may gradually and secretly withdraw them."

Since April 2010, China has imposed a raft of measures aiming to cool down property prices. The measures include higher down payments, limits on the number of houses that people can own, the introduction of a property tax in Shanghai and Chongqing, and the construction of low-income housing.


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