New statistics showing a continuous rise in house prices fly in
the face of numerous media reports that domestic property prices
have already started to decline in some cities.
Policymakers should step up efforts to curb surging house prices
now to avoid a later rush for homes in fear of further price
hikes.
Housing prices in 70 large- and medium-sized cities rose 10.5
percent year-on-year in November. The rise, 1 percentage point
higher than that of October, hit a new high, undermining the
government's efforts to stabilize house prices.
As part of its macroeconomic controls to cool economic growth
that is bordering on overheating, the government has introduced a
host of tightening measures to rein in soaring house prices.
For instance, the banking authorities recently made a strict
definition of "second home" according to the property owned by the
families of mortgage applicants rather than just the applicant.
The rule will deal a heavy blow to speculative homebuyers as
they will have to make a higher down payment and cannot enjoy
preferential interest rates. In some cities, it was such
speculative house purchases that considerably fuelled runaway
property price hikes.
Besides, the government also decided to adopt a tight monetary
policy to check credit growth. In the absence of easy access to
bank loans, it is believed that some developers may cut prices to
promote sales due to liquidity concerns instead of hoarding houses
for fatter profits.
Under such circumstances, media reports from across show the
country that house sales are shrinking and prices are plunging in
cities that once boasted jaw-dropping amounts.
It is surely not difficult for these reports to find an
audience. Rocketing house prices in recent years have made home
ownership a heavier than ever burden for most potential buyers.
However, the latest house price data has proved it is only too
premature to conclude that the property market has reached a
turning point. The November figure indicates that the momentum of
property price hikes in major cities remains strong.
Only when the government substantially increases the supply of
affordable homes for low-income groups and provides more land lots
for development can the imbalance of demand and supply in the
property market be addressed.
(China Daily December 15, 2007)