The Chinese government’s cooling measures in the property market are thought to have faltered as property sales have increased, prompting speculation that the government may introduce more tightening measures.
Cities like Shanghai saw an increase in housing transactions in August over the previous month, said several real-estate data providers. China’s largest developer China Vanke Co. said sales grew 149 percent from 2009.
Real-estate stocks recently fell following a newspaper report that the government may announce another set of cooling measures, and Citigroup Inc. said that additional steps are “very likely.” The central government is trying to reduce the risk of asset bubbles after flooding the market with funds to promote recovery from the financial crisis.
“The key drivers of the property bubble are excess liquidity and lack of investment alternatives, which are still largely in place,” said Ken Peng, an economist at Citigroup.
Property stocks tumbled 1.5 percent, the worst performer of five industry groups on the Shanghai Composite Index.
Mr. Peng said additional tightening measures may include curbs on the discounts that can be offered by banks on mortgages, and restrictions on pre-sales of apartments. Authorities may also speed up programmes to increase housing supply, reconsider introducing a property tax and strictly implement current restrictions on mortgages.
According to a report from the 21st Century Business Herald, measures may include a ban on third-home purchases, mandatory lowering of home prices and stopping loans to developers.
However, Jing Ulrich, chairwoman of equities and commodities at JPMorgan Chase & Co., said that government plans to boost the supply of low-priced housing will help lower prices and additional measures are not needed.
Soufun Holdings Ltd. said housing transactions in Shenzhen saw an 84 percent growth in August over the previous month, while sales climbed 23 percent in Beijing, 31 percent in Shanghai and 56 percent in Guangzhou.