By Nikki De Guzman:
Despite more stringent efforts by China’s outgoing government, recurrent issues in the property market will be inherited by the country’s new leaders, reported Bloomberg.
Existing leaders rolled out their last attempt to cool the market on 1 March, but the measures took its toll on stocks. And while property curbs introduced last year have been successful, home prices rose after the central bank cut interest rates to reverse the economic slowdown.
With property accounting for a significant portion of China’s GDP, and some cities relying on land sales for revenue, its leaders are left with the dilemma of balancing efforts in keeping home prices affordable for ordinary Chinese while mitigating potential effects to the economy.
Nicholas Consonery, Asia analyst at New York-based consultancy Eurasia Group, said: “Beijing recognizes that there are bubble conditions in many major urban real estate markets and wants to be seen as responsive to public concerns about rising home prices.”
“But the new leadership is well aware of the dangers of freezing the nationwide market and causing a bigger slowdown in growth.”
In February, home prices increased once again continuing a nine-month trend.
Outgoing Premier Wen Jiabao will pass the challenge of maintaining affordable housing to Li Keqiang. During Wen’s leadership, home prices increased one-and-a-half times ever since China started private home ownership in 1998.
Meanwhile, Zhu Haibin, chief China economist at JPMorgan Chase, said: “Wen’s property polices in the past 10 years couldn’t be counted as successful. The property-tightening measures will continue under the new administration, but before Wen goes, he certainly wants to give them a push.”
Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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