China has said it will control credit growth and take active measures to promote healthy development of housing market as real estate prices rose in 100 cities sparking concerns over property bubble.
Zhou Xiaochuan, governor of the People’s Bank of China, was quoted as saying state-run Xinhua news agency that China’s credit expansion has slowed and growth will be controlled in the future along with a steady recovery in the global economy.
Real estate prices in 100 major Chinese cities rose 14.9 per cent in the first nine months of 2016, with August and September seeing record month-on-month growth of more than 2 per cent, according to the China Index Academy (CIA), a private property research institute.
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A total of 19 Chinese cities had rolled out policies in the past week ranging from higher down payments and home purchase restrictions to curb speculative housing purchases.
Zhou said Chinese government is very concerned about the recent rise in home prices and will take active measures to regulate the market.
His remarks came amid tougher regulations in the housing markets of both first-tier cities such as Beijing and Shenzhen as well as smaller second- and third-tier cities.
Markus Rodlauer, deputy director of the International Monetary Fund (IMF)’s Asia Pacific Department, the report said that the rising prices are not sustainable and will fall back with regulators hitting the brakes.
Shrinking profits in the real economy and expectations of yuan devaluation have led to capital flooding the property market, CIA said.
China’s new yuan-denominated lending in August more than doubled from a month ago to 948.7 billion yuan (about USD 145. 95 billion) with mortgages representing 55.7 per cent of the 529 billion yuan in household loans, People’s Bank of China data showed.
Chang Yong Rhee, Director of IMF’s Asia and Pacific Department, advised China to advance structural reform as China’s credit grows at twice the speed of the economy, mainly driven by demand from the property market rather than enterprises.
Hit by slowdown, China’s economy grew 6.7 per cent in the second quarter of the year, the lowest quarterly growth rate since the global financial crisis in early 2009, but still within the government’s target range of 6.5-7 per cent for 2016.
The Asian Development Bank has upgraded its forecast for China’s 2016 growth from 6.5 per cent to 6.6 per cent, and to 6.4 per cent growth from 6.3 per cent for 2017.