China’s Premier Wen Jiabao said measures to curb the country’s property market weren’t well implemented and reiterated his goal for home prices to return to a “reasonable level” during his term that ends in 2012.
The government will also increase the supply of affordable housing and introduce more measures to curb speculation, he said on National Radio yesterday. China’s land sales are expected to top 2 trillion yuan ($302 billion) this year from 1.5 trillion yuan in 2009, the official People’s Daily reported today.
“We introduced about 15 measures this year but it appears that they were not well-implemented,” Wen said. “I believe that after some time, the home market will return to a reasonable level with our efforts.”
China’s home prices rose for an 18th month in November after measures including suspending mortgages for third-home purchases and a pledge to speed up trials of property taxes to restrain foreign capital and cool property prices. In October, the People’s Bank of China increased interest rates for the first time in three years and raised borrowing costs for a second time on Dec. 25 to control asset bubbles.
“The data itself clearly showed home price growth wasn’t well controlled,” said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. “But these were very general promises. It’s hard to tell what the reasonable price level is.”
More Effective
China may be more effective in controlling home prices in 2011 after as government shifts its monetary policy and with the increase in affordable homes, Shen said.
China will start building 10 million units of government- subsidized homes next year, almost doubled this year’s target of 5.8 million units, Wen said. The government completed 3.7 million of such homes this year, he said.
Wen also said some college graduates and workers should solve their “housing problems” by renting instead of owning properties.
The government also raised the public housing fund rate, or the borrowing cost for housing loans from a state-run savings fund, following the increase in the nation’s interest rates, the Ministry of Housing and Urban-Rural Development said in a statement on its site. Chinese residents and their employers contribute to the fund for low-interest loans.
China’s property boom continues “unabated” and has even picked up since the government enacted policies to cool speculation, Jim Chanos, the hedge-fund manager who predicted the market may crash as early as 2010, said in a Bloomberg Television interview earlier this month. A lot of policies in China are designed to be “skirted,” he said, reiterating his view that China is on a “treadmill to hell.”
To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at +86-21-6104-3035 or bcao4@bloomberg.net
To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net
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