The bailout trend has been exported from the West to Nanjing, capital of Jiangsu Province in southeast China.

"Suggestions on Maintaining Stable and Healthy Development in the Real Estate Market" (hereafter known as The Suggestions) was published by the Press Office of Nanjing Municipal Government in the presence of leaders of the local Bureau of Real Estate, Bureau of Land and Resources, and Price Bureau on the afternoon of September 27.

Of relevance to house purchasers in The Suggestions is that Nanjing local government proposed a moderate adjustment on commodity house transaction taxes, and to reset the starting point for tax levies on second-hand house transactions, both of which are intended to lighten the burden on purchasers in house transactions.

In the interests of contractors, the government will help make more funds available for real estate companies involved in transactions such as syndicated loans, financing, group trusts, and mortgages on in-progress construction.

"Loans are the key," said the CEO of an undisclosed state-owned real estate holding company. He thinks that although the city government has influence on the loan issue at local level with the People's Bank of China (PBC), "the decision on the amount of the loan still rests with the PBC, not the municipal government."

On hearing the "bailout" message, a large local real estate company called an urgent meeting and altered its original sales plan for National Day Golden Week in terms of discount margins, adopting a more aggressive promotion strategy. Meanwhile other contractors are postponing the opening date of their new properties while waiting for follow-up policies of The Suggestions, and to gauge the market's reaction.

However, the market remains unexpectedly quiet. A slight increase in the number of house transactions was seen in Nanjing during the 7-day holiday, but the estimated "blowout" phenomenon did not occur: 609 subscriptions for new homes and 38 settlements were registered, a 35% and 14% increase respectively over the same period last year. Luo Hao, research manager with Centaline (Nanjing) Company considers the result relatively disappointing. "The market remains equivocal about the new policy," he said, "though it is a reflection of the government's attitude." And he also thinks the influence of The Suggestions is limited, though it did generate a small rise in confidence in the market.

Compared with cities like Shenzhen, Hangzhou and Shanghai, Nanjing delivered a better "report card" in the housing market. But why the local authority acted so hastily on the bailout plan remains unclear.

In response to public concerns, deputy director of Nanjing Real Estate Bureau Guo Hongding clarified that during a period of cooling in the housing market, with new housing-related social problems to be faced, regulation and adjustment measures are the best way to ensure stable development in the real estate sector, which in turn will have a positive influence on the national economy and the public livelihood.

According to statistics from Centaline, during the first three quarters of this year revenues on land block transfer registers were 12.2 billion yuan (US$ 1.79 billion), a 33% drop from the same period last year. A number of cases of land blocks auctioned at the reserve price are worthy of note, as are a number of abortive tenders.

This official also expressed his confidence in the new policy and the positive impact it is expected to produce, while acknowledge that central government participation is also essential to ensuring a sound economy.

(China.org.cn by Maverick Chen, October 16, 2008)