China's property market slows in 2011

Thursday, 19 January 2012 07:49

China's property market slowed last year, official figures showed Tuesday, as the government sought to bring down runaway housing prices amid fears of a speculative bubble.

The country introduced a range of measures aimed at curbing the real estate market last year, such as bans on buying second homes in some cities, hiking minimum down-payments and introducing property taxes.

Overall property investment rose an annual 27.9 percent to 6.17 trillion yuan ($980 billion) in 2011, slowing from growth of 33.2 percent in 2010, the National Bureau of Statistics said.

Meanwhile, housing sales -- excluding government subsidised homes -- rose 12.1 percent to 5.91 trillion yuan last year, marking a slowdown from 18.9 percent growth in 2010.

"Our major progress is that speculative-based investment in the property market has been curbed," statistics bureau chief Ma Jiantang told a news conference in Beijing.

Analysts have warned the correction in the property market is threatening to drag on economic growth this year, despite government resolve to keep control measures firmly in place.

Alistair Thornton of IHS Global Insight in Beijing said the rapid slowdown in property investment in the final month of last year indicated the overall economy was undergoing an "aggressive" slowdown."In this light, the property market correction is providing the greatest downside momentum," he said in a research note.

At the same time, China has pledged to invest more than $700 billion in low-cost housing to help those priced out of the market, with plans to build or renovate 36 million homes over the next five years.

Property developers are hoping Beijing will ease control measures this year, though analysts are divided on the timing of such a move.

In Shanghai, among China's most vibrant property markets, city mayor Han Zheng has dashed hopes of an immediate relaxation.

"This year, the strength of the property market control measures will not be reduced and the policy will not change," he told a news conference on Monday.Home prices in most major Chinese cities dropped in November last year from the previous month with 49 of the 70 Chinese cities tracked by the government reporting falls.

The government is due to release property price figures for December on Wednesday.Statistics bureau chief Ma played down concerns that the slowing property market might present a risk for the overall economy.

"Local debt and the property market will not constitute the largest risks for China's economic fundamentals," he said.

There are also worries local governments, who borrowed heavily to fund infrastructure and other projects, could cause an explosion in bad debt.

From The Star