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China mulls stronger property controls

August 24, 2012

BEIJING: China is studying new measures to beef up controls on the property sector, state media said, amid signs of rebounding housing prices.

The housing ministry is “closely monitoring” changes in the property market and “is studying with relevant departments further policies to strengthen market control”, Xinhua news agency said yesterday, citing an unnamed official.

New home prices in 50 out of the 70 Chinese cities tracked by the government increased in July from June, latest official data showed. That represented a doubling from 25 in June.

The price rebound came despite government tightening policies for more than two years that have included prohibitions on buying second homes, an increase in minimum down-payments and the introduction of property taxes in certain areas.

However, a recent review of 16 provinces and cities by official inspectors found some local authorities had loosened controls or even granted purchasing subsidies to stimulate home-buying amid China’s economic slowdown, Xinhua said.

The inspectors have “demanded immediate rectification in areas that had relaxed the controls and stressed that local authorities must not loosen the controls in any form with any excuses,” it said, citing the ministry official.

An increase in supply and consecutive cuts in mortgage interest rates by commercial banks also encouraged consumers to buy, the official said.

China has recently cut interest rates twice in quick succession and slashed reserve requirement at banks to encourage lending as Beijing seeks to boost the economy after growth hit 7.6% in the second quarter, its lowest in more than three years.

- AFP


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