China eyes more property prop up

By Hu Yuanyuan (China Daily)
Updated: 2008-12-09 07:28

Stimulating self-use housing demand and strengthening low-cost housing construction will continue to be the government's major focus in stabilizing the property market next year, experts said.

"How to maintain a steady property market will be definitely a big concern for the government, especially at a time when the country's economy is facing a growing risk in sliding down," said Qin Xiaomei, research chief at CB Richard Ellis' Beijing branch.

"As far as we know, measures to further stimulate the self-use housing demand may be a topic in the ongoing Central Economic Work Conference."

Property investment usually accounts for 25 percent of overall investment. In some cities, this proportion could be above 50 percent. Thus, falling property investment and a shrinking number of transactions have reduced local governments' land remise fees and tax income.

The annual Central Economic Work Conference, which opened on Monday, will set the tone for next year's economic policy. The government has already taken a slew of measures to boost consumers' housing demand, such as a tax cut on property transactions and the central bank's biggest slash in interest rates in 11 years.

To further revitalize the sluggish property market, the government may also loosen its lending policy on those looking to buy a second home. And Chongqing municipal government plans to offer individual income tax refunds on first-home purchases.

"What the government really cares about is the market's vibrancy rather than the price," said Qin Hong, deputy director of the policy research center under the Ministry of Housing and Urban-Rural Development. "The government will dig out more potential for self-use buying rather than investment-oriented buying."

Thanks to those stimuli, the property markets in some key cities have shown signs of warming up.

According to the Beijing Property Transaction Management website, 13,721 forward delivery housing deals were inked in November, up 48 percent from the previous month.

Statistics from Shanghai UWIN Real Estate Research Center show that 6,201 units of first-hand apartments with floor area of 717,551 sq m were sold out in Shanghai in November, compared with 459,764 sq m in October.

However, quite a number of deals involved low-cost housing.