China promised on Sunday that it will not allow foreign speculative investment to affect the local property market. This, as property prices in the mainland increase quickly.
The directive from the State Council will guide ministries and local authorities, including The China Banking Regulatory Commission and the People’s Bank of China, to work out detailed policies.
“Relevant departments must enhance monitoring of loans and cross-border investment to prevent illegal inflows of capital into the property market and to avoid the impact of overseas hot money on China’s real-estate market,” said the State Council.
It added that the banking regulator and central bank should improve ‘window guidance’ and oversight of mortgage lending.
Around one-sixth of China’s nearly 10 trillion yuan ($2.04 trillion) in new loans last year flowed into the property sector.
Concerned that a property bubble could spur economic and social instability, Beijing vowed to fight overly fast price increases, although its initiatives so far, like the restriction of sales tax exemptions, have been relatively mild.
The State Council encouraged local authorities to increase the supply of more affordable homes, especially in cities where prices of houses are rising sharply.
It stressed that it would control home purchasing for ‘investment and speculation purposes’ and maintain the 40 percent minimum down-payment for second home purchases.
According to the central bank of China, it would watch the property market closely this year, while managing inflationary expectations.