Renewed emphasis by the central government on the need to rein in property inflation shows once again the country's determination for solid and sustainable growth.
Premier Wen Jiabao on Wednesday said the country should continue to control the fast increase in fixed-assets investment, bank loans and land use for new projects, especially the ones that are energy consuming and highly polluting or are in the sectors with marked overcapacity.
Li Xiaochao, spokesman for the National Bureau of Statistics, said yesterday the current housing supply should be better structured as demand from urban residents is expected to increase even faster in coming years.
"More efforts should be made to improve housing supply at medium and low prices, which are most popular with urban residents," said Li at a news conference yesterday.
Analysts and industry experts said the excessive increase in property investment poses long-term economic and financial risks.
Shuai Hu, a property market analyst at Haitong Securities, said: "A stricter macro-control policy on property development would take pressure off inflation and help smooth out asset price rises."
According to figures released by the National Bureau of Statistics, the aggregate fixed-assets investment rose 25.7 percent in the first nine months from the previous year.
In the first three quarters, aggregate investment in the country's property development reached 1.6 trillion yuan, up 30.3 percent from the previous year.
Kenny Ho, research head of Jones Lang LaSalle, a leading real estate agency, said the much stricter macro-control policy on property by the government could accelerate the decline in bank loans for property projects in the fourth quarter, following a downward trend in the third quarter.
The government's renewed efforts in the real estate industry had a large impact on property stocks yesterday on the Shanghai bourse. The property shares price sub-index fell 245.51 points, or 3.42 percent, to close at 6926.67 points.
Stocks of Beijing North Star, a property company, plummeted 9.92 percent to close at 11.49 yuan, while Industrial Property tumbled 5.01 percent to close at 8.99 yuan.
(China Daily October 26, 2007)
