Tuesday, July 10, 2012

China's property cooling measures a long-term policy

Following a move by China's central bank to cut interest rates which triggered a rise in property stocks, Premier Wen Jiabao reckons that the country must continue its property tightening measures and prevent prices from rebounding.

Controlling property investment and speculative demand should be a long-term policy, said Wen.

His most recent remarks are in line with the government’s commitment to maintain restrictions on property purchases, even as it increases infrastructure spending and reduces interest rates to reverse the country’s economic slowdown.

“We must unswervingly continue to implement all manner of controls in the property market to allow prices to return to reasonable levels. We cannot allow prices to rebound, or all our efforts will come to naught,” said Premier Wen in a meeting with local officials and residents.

New home prices in China surged for the first time in 10 months and shares of property developers rose the most in four months, adding to concerns that prices will rise to unreasonable levels again.

In addition, Mr Wen said that the government’s differentiated mortgage policy and other property purchase restrictions must be maintained. Meanwhile, the central bank warned that financial institutions must follow the lending curbs set by the government.

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