China City-by-City Property Moves Signal Coordinated InitiativeBy and
Moves by several large Chinese cities to put restrictions on home resales suggest a coordinated initiative, coming weeks before a pivotal Communist Party leadership reshuffle.
Property investment has continued to grow despite previous measures to rein in home-loan growth, which has propelled recent credit expansion in China. The danger is that continued rapid real-estate construction, fueled by debt, sets the financial system up for defaults down the road.
Among those enacting steps is Chongqing, which since July has had an associate of President Xi Jinping -- Chen Miner -- as its Communist party boss. Chen is a focus of speculation among China watchers as a potential candidate for elevation next month.
Property stocks took a tumble after the moves, with one index heading for its steepest drop in more than two years. Read more about the impact here.
Yet more steps may be in store. “Property tightening may continue in the fourth quarter to further cool down the market,” said Katrina Fu, Hong Kong based analyst with Sanford C Bernstein.
— With assistance by Amanda Wang