China likely to relax property policies in 2012

November 20th, 2011 - 2:38 pm ICT by IANS  

Beijing, Nov 20 (IANS) China is likely to loosen its restrictions on the country’s property market in the third quarter of next year, as plummeting prices could slow the growth of the economy, said a university report.

Property prices, sales and investment will fall in the first quarter of next year because of the government’s tightening measures, according to the report released by the Beijing-based Renmin University of China Saturday. It added that the possibility of a market collapse is slim.

A 20-percent fall in housing prices will force the government to adjust its policies, as a steeper decline will bring economic growth below 9 percent next year, Xinhua cited the report as saying.

The report predicted that the policy shift will probably take place in the third quarter of 2012. The central government will relax credit for the property market and loosen limits on home purchases.

The price correction will not trigger systematic risks, a massive sellout or an economic “hard landing” in China, the report said.

Since April 2010, China has imposed a raft of measures aiming to cool down property prices. The measures include higher down payments, limits on the number of houses that people can own, the introduction of a property tax in some cities and the construction of low-income housing.

Government data showed Friday that 34 cities in a statistical pool of 70 major cities saw declines in new home prices in October, compared with 17 in September.

Prices of new homes in four major cities (Beijing, Shanghai, Guangzhou and Shenzhen) saw month-on-month price drop in October after staying unchanged for three months.

The report said local governments might start to reverse the curbs in the second quarter of next year due to their heavy reliance on land sales for fiscal revenue.

During a visit to Russia earlier this month, Premier Wen Jiabao reiterated that the government will not waiver on its tightening measures and pledged to bring prices down to a reasonable level.

The report also forecast that economic growth will slow to 9.2 percent in 2012, a slight drop from the 9.4-percent growth posted this year.

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