–China is weighing possible implementation of further property tightening measures
–Risks stemming from property loans may pose threats to the banking system
–Risks of a rebound in property prices can’t be ignored, the People’s Daily warns
(Adds more details from People’s Daily report in 9th-10th paragraphs.)
The Chinese authorities are weighing the possibility of implementing further property tightening measures as they pay
close attention to the risks that property loans could pose to the banking system, the Shanghai Securities News reported
Tuesday, citing unnamed people familiar with the matter.
The State Council will send six teams to investigate the property markets in 12 provinces, which will include
inspecting property loans, the newspaper said without elaborating further. Such inspections are routine in China.
As changes in revenue from land transactions could affect local government financing platforms, and any change in the
financial situation of property developers could affect real estate development and heighten the risks of property
loans, China’s banking regulator is considering further curbs on property loans and property trust operations, the
newspaper said, citing the people.
China’s property market has shown signs of a turnaround in recent months, as sales from first time home buyers and
upgraders picked up following more accommodative monetary policy and local tweaks to property curbs. The central bank
has cut interest rates twice since June and has lowered the reserve requirement ratio of banks three times since
November 2011.
Officials have said the rebound in sales and prices in some Chinese cities is a cause for concern, and reiterated that
the property tightening measures must be kept in place.
China’s property market faces the risk of a retaliatory rebound that could cause tightening measures to fail, the
China Securities Journal reported Tuesday, citing a report from a government think tank.
An easing in monetary policy would affect the property market and make it more difficult to implement property
tightening measures, the newspaper cited the report, issued by the Chinese Academy of Social Sciences, as saying.
The report recommends that China should expand property taxes, abolish the pre-sale system currently in place for some
segments of the property market, and improve differential financial policies. Currently, credit policies such as lower
mortgage rates for first-time home buyers and a blanket ban on mortgages for third and subsequent home-buyers are in
effect.
The Communist Party’s main newspaper People’s Daily said Tuesday in a separate report that the country’s property
market hasn’t seen a “full-scale” turnaround, but potential risks of a rebound in property prices can’t be ignored.
“Once the rebound in housing prices exceeds expectations, new [tightening] measures will be immediately introduced,”
the newspaper said, without elaborating what kind of measures may be introduced.
Newspaper website: http://www.cs.com.cn, www.cnstock.com, www.people.com.cn
Write to djnews.shanghai@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires 07-24-120408ET Copyright (c) 2012 Dow Jones Company, Inc.
