Sunday, April 25, 2010

China home prices 'a major risk'

Beijing - Unhappiness among the Chinese people over rising property prices is at an 'unprecedented' level, an adviser to the nation's central bank said yesterday.

The overheated sector is a 'major risk' to the economy and the government must rein in speculation, Mr Li Daokui added.

'The people's unhappiness over increasing house prices has never been stronger,' he said at a forum on China's macroeconomic policies in Beijing, according to a report on financial news portal

'The main risk facing China's economy is the overly rapid asset-price gains, especially in property prices,' he saiD.

Property prices in 70 Chinese cities surged by a record 11.7 per cent last month, prompting the government last week to increase down payment requirements, raise interest rates on second homes and bar bank lending for third dwellings.

The real estate market will see 'some correction' because of the measures, said Mr Li, who was appointed last month as one of three academic advisers to the People's Bank of China, Bloomberg reported.

Some more steps may be taken over the next year to 18 months, he added.

China's security regulator said yesterday it aims to tighten real estate financing by requiring developers to provide fund-raising plans for review by the land ministry.

The China Securities Regulatory Commission has submitted financing requests from 41 companies to the ministry, which has reviewed 25 of them, according to a government statement.

Source: Sunday Times, 25 Apr 2010

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