A series of official comments in recent days have shown that the Chinese government remains committed to forcing down housing prices, despite worries about a weak global economy and complaints from property developers.

The government’s determination to keep cracking down on its frothy real-estate market may be a political necessity but risks hurting growth at a time when much of the world economy is weak, and contrasts sharply with efforts in the U.S. and Japan to add fuel to the fading global recovery.

Despite government measures in place since April, property prices have not fallen much in major Chinese cities, and housing sales have actually picked up in the last few weeks — signs the measures aren’t achieving their declared aim of curbing speculative purchases and making homes more affordable.

Government officials, while emphasizing they are committed to supporting growth, are unequivocal that more needs to be done to fix the housing market. China’s chief economic planner, Zhang Ping, told the nation’s legislature last week: “Current housing prices in some large and medium-sized cities are still too high.”

For the rest of the year, the government will “further implement measures to contain the overly rapid rise of housing prices in some cities, and curb speculative and investment demand for housing,” said Mr. Zhang, the head of the National Development and Reform Commission.

A range of official voices, including an advisor to the central bank, a banking regulator, and commentaries in state media, have agreed: Housing prices still need to come down.

Changing course now would hurt the government’s credibility with the public, analysts say. Many urban Chinese feel the surge in property prices over the past year has put home ownership out of their reach. Yet the repeated promises that tough policies will not be changed could also leave Beijing with less room to maneuver if growth slows more sharply than anticipated.

“These tightening measures will have to continue for at least a few more months,” said Deutsche Bank economist Jun Ma. China’s government is also pushing ahead with other restrictive measures, he noted, such as controls on lending, tighter supervision of public-works projects and closures of energy-wasting factories.

The drive to cool property markets in China—as well as in other booming Asian economies like Hong Kong and Singapore—comes as Japan is rolling out a new stimulus package and the U.S. looks for ways to bolster its own expansion.

By contrast, most forecasters expect China’s economic growth to ease to a still-rapid 8% to 9% by the end of this year, from 11.1% in the first half. And its core manufacturing sector continued to expand in August, according to the closely-watched purchasing mangers’ indices issued Wednesday.

The measures introduced in April included higher down payments and mortgage rates for many home buyers, limits on purchases by nonresidents and more construction of affordable housing.

At first, the moves seemed to have their intended effect, quickly cooling a booming market: Sales fell, and nationwide average housing prices were flat in both June and July.

But there hasn’t yet been a major adjustment. New figures from Soufun, a real-estate consultancy, show property prices were actually higher in August than July for most of the 30 major cities it surveys. That includes a 12.3% rise in the capital city of Beijing, which already has some of the nation’s highest prices.

Housing sales have also rebounded, and in southern cities such as Guangzhou and Ningbo they are back to levels reached before the government’s new policies started.

The latest data “should strengthen Beijing’s view that a reversal of policy tightening measures put in place earlier this year is not appropriate for the time being,” said Brian Jackson, an economist for Royal Bank of Canada.

A commentary in the People’s Daily, the Communist Party’s newspaper, Tuesday reinforced the message: “With house prices still high and not falling, the results of the policies are still quite far from what ordinary people expect,” the commentary said.

Xu Ce of the State Information Center, a government think tank, said in a report this week that the government needs to be careful not to crush real-estate investment, which is a major support for the broader economy. But he agreed that containing the rise in house prices is necessary to avoid a potential banking crisis, and broader political strains.

“The overly rapid rise in real-estate prices is now not just an economic problem, but an issue that affects the lives of a majority of people as well as social stability,” Mr. Xu wrote in the report.

Source: http://online.wsj.com/

China overtook Hong Kong as the world’s hottest housing market in the first quarter, with prices rising at more than double the rate of anywhere else, property adviser Knight Frank LLP said.

Values soared 68 percent in China’s main cities from a year earlier, according to a global index compiled by the London- based broker. Gains for Hong Kong, India, Singapore, Australia, Malaysia and Indonesia helped lift average prices in the Asia- Pacific region by almost 18 percent.

China’s real estate market is being fueled by limited investment opportunities available to locals and the migration of rural Chinese to bigger cities, according to economists at Barclays Capital. The gains suggest that government efforts to curb property speculation through such measures as loan restrictions and larger down payment requirements haven’t yet deflated the market.

“The top four positions in our rankings are all occupied by Asia-Pacific locations, whilst Europe dominates the bottom half of the table,” said Liam Bailey, Knight Frank’s head of residential research. Twenty-five of the 47 countries in the index registered house-price growth. Declines slowed in the most depressed markets of the Baltic and Ukraine, he said.

China’s economy grew at the fastest pace in almost three years in the first quarter, boosted by Premier Wen Jiabao’s $586 billion stimulus package.

China’s prosperity has benefited the region. Property values rose almost 31 percent from a year earlier in Hong Kong, and increased 24 percent and 20 percent, respectively, in Singapore and Australia, Knight Frank said.

China’s ‘Bubble’

The “bubble” in China’s property market is going to burst very quickly, with prices set to fall as much as 20 percent in the next 12 to 18 months, Sun Mingchun, a Hong Kong-based economist at Nomura Holdings Inc., said in an interview yesterday.

China’s banking regulator said this week that it sees growing credit risks in the nation’s real-estate industry and warned of increasing pressure from non-performing loans.

Investment in real estate rose 38 percent to 1.39 trillion yuan ($204 billion) in the first five months of this year, according to China’s statistics bureau.

Most of the countries where home prices fell in Knight Frank’s global index were in Europe. Estonia was the worst performer, with a drop of 40 percent in the first quarter from a year earlier, followed by Ukraine with a decline of almost 35 percent.

Values rose 8.8 percent in the U.K. and 2.3 percent in the U.S. In Dubai, which went from the world’s best performer to the worst during the global property slump, prices dropped 8.2 percent in the first quarter.

Source: http://www.businessweek.com/

It was not easy to buy a property in China in the pas but Government has made some amendments for foreigners to buy properties in China to boost its economy. Following is a report published on a website:

“Restrictions on foreigners buying real estate property in Beijing were called off as Beijing introduced a slew of measures Friday to revitalize the sluggish property market.

The residency requirement and house type limits for expatriates buying homes in Beijing has been called off throughout 2009, according to the 15 opinions co-released by nine departments — including the municipal construction committee, development and reform commission and finance bureau of Beijing.

In its bid to curb overheated property market, the Beijing municipal government issued regulations in 2007 stipulating that only expatriates living in Beijing for more than one year and those who could provide details proving they would be the primary inhabitants could buy one house.

“In simple words, foreign expatriates in Beijing could buy only one house then,” said Li Wenjie, general manager of real estate agency Centaline China´s North China Branch.

“The house price skyrocketed at that time. The government wanted to curb foreign capital from driving up the property price.”

Foreign purchases accounted for seven to eight per cent in all the real estate transaction in Beijing before the regulation took effect. After that, the number dropped to 0.5 per cent, he said.

Due to customers´ strong wait-and-see sentiment, the sold floor space of commercial residential buildings fell 40 per cent in 2008 than the previous year. And the property price growth rate in 2008 was down 1.9 per cent over 2007.

After China´s State Council, or Cabinet, unveiled a real-estate stimulus package in November including tax and interest rate cuts to boost home purchases, the market showed signs of warming up.

The capital´s total turnover of commercial residential buildings in November was 5,431 sets, a 58 per cent gain year on year. The first half of January saw a turnover of 3,187 sets, up 19.8 per cent then the previous year.”

Source: http://www.property-report.com/