Wary of rebound, China tightens grip on property

BEIJING -- Chinese regulators will hold firm to curbs on the property sector and may further tighten control measures in case home prices trend up, industry and government analysts said.

With its economy softening, China is unlikely to roll out notably harsher policies against the real estate sector but may step up its efforts to boost the housing supply, expand property tax trials and raise home transaction costs to prevent the market from rebounding, according to their observations.

The State Council announced Tuesday that the government will send eight teams of inspectors to 16 cities and provinces later this month to investigate local implementation of property regulation policies.

The move is mainly aimed at ensuring the implementation of existing regulations instead of preparing for new policies, said Wang Juelin, vice director of the Policy Research Center with the Ministry of Housing and Urban-Rural Development, China's real estate watchdog.

If the inspectors discover problems, new government moves are expected to focus on increasing market supply rather than curbing demand, which has already been successfully done through current home purchasing restrictions, Wang said.

He said he believes the government may clamp down on housing and land hoarding more forcefully to supply more homes, as the areas of both newly-developed property projects and newly-purchased land by developers have been slumping.

The State Council's announcement came after the country's property market showed signs of warming following the government's efforts to stimulate the slowing economy in recent months.

In June, more major cities saw slight hikes in housing prices from May, according to official data. June was the first month since September 2011 that the number of cities with month-on-month price increases exceeded the number of cities that witnessed drops.

A report by the China Urban Land Price Dynamic Monitor shows that 33 cities out of the statistic pool of 105 have "fine-tuned" their property policies since the second half of 2011 by allowing home buyers to borrow more from public housing funds, reducing taxes and fees or subsidizing home purchases.

In the latest move of this kind, authorities in the eastern city of Nanjing on Monday announced plans to facilitate first-time and low-income home buyers to borrow from public housing funds and lift home purchasing restrictions for high-tech startups.

However, central government officials have repeatedly stated that the property regulation measures will be kept in place to prevent a rebound in housing prices.

The government's property controls will remain stable with a tendency of tightening in the second half of this year, according to a report issued Thursday by the China Index Academy, a property market observer.

"In the pro-growth policy environment, there won't be notably harsher regulations than current ones," the report said.