China Policy ‘Misinterpretation’ Fueled Home Prices, Yi Says
China’s home price increase was the result of a “misinterpretation” of the nation’s economic policies, a government think tank researcher wrote today.
China’s new home prices rose for the first time in 10 months as the government eased its monetary policies to bolster the economy, SouFun Holdings Ltd., the nation’s biggest real estate website owner, said this week.
The country has helped ease funding by lenders and vowed to support first-time home buyers. The central bank cut the benchmark one-year lending rate last month for the first time since 2008, after imposing curbs in the past two years that included higher mortgage rates and down payments.
“The current rise in house prices has to a large extent been a result of misinterpretation of the government’s policies to stimulate the economy, an increase in real estate speculation and excessive concerns among ordinary homebuyers that prices will continue to rise,” Yi Xianrong, a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today.
China Vanke Co., (000002) the biggest developer by market value on mainland exchanges, said yesterday its contracted sales were 13.3 billion yuan ($2.1 billion) last month, a 24 percent jump from May. Longfor Properties Co. (960) reported today that June sales rose 36 percent from May.
“To reverse the rising trend in house prices, the central government should make further efforts to convince people that they can expect prices to fall and pay close attention to the risk of real estate bubbles,” Yi wrote.
The comments followed a commentary in the state-run People’s Daily yesterday that said the country shouldn’t relax property controls as the task of ensuring long-term stable, healthy development of the property market hasn’t been achieved.
--Bonnie Cao Editors: Linus Chua, Tomoko Yamazaki
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