The city of Wuhu (pictured) in China has suspended its decision to ease property cooling measures, in a move that underscores the country’s determination to lower home prices.
The industrial city in China’s eastern province will temporarily suspend its home subsidy policy so it can further study how to impose the rules.
However, the real estate market reacted strongly to the move, with Chinese property stocks dropping 0.62 percent this week.
“The postponement of Wuhu’s measures dashed hopes among property developers that the central government would loosen its tightening measures this year to buoy the slowing economy,” said Chen Yunfeng, Secretary-General of the National Real Estate Managers’ Association.
Last week, the city announced its plan to relax property tightening measures. However, many property experts criticised the proposal.
“The retraction was probably done (due to) pressure,” commented Jeffrey Gao, a real estate analyst from Macquarie Group. “Their policies went too far and were surprising.”
Du Jinsong, a Hong Kong-based analyst at Credit Suisse, said the reversal “clearly shows that the stock market has severely underestimated the central government’s political will to cool the housing market significantly further.”
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