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Property prices in the 70 major cities rose by 5.7 percent year-on-year in November. CFP |
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Property prices in the 70 major cities rose by 5.7 percent year-on-year in November. CFP |
Shares in China's major property developers suffered a big drop yesterday after the central government announced a plan to curb soaring real estate prices in some cities.
The Shanghai Composite Index dropped 0.86 percent to close at 3274.460 points, with property stocks performing particularly badly.
Vanke, the country's biggest developer by market value, fell 3.39 percent to 11.39 yuan. Another industry heavyweight, Poly Real Estate Group Co, slumped 3.38 percent to 23.75 yuan, falling for the sixth day.
"The poor performance of property stocks was definitely triggered by the government's latest plan to rein in the fast-growing real estate prices in first-tier cities, but this is very unlikely to prevent house price rises next year due to the lack of detailed measures," said Carlby Xie, an associate director at Colliers' North China Division.
"I expect it may take the government two years to initiate a more detailed plan."
China's State Council, the cabinet, released a statement on Monday that revealed the government was discussing measures and policies for the healthy development of the country's real estate sector because house prices in some cities are rising so fast.
It is the latest indication of the government's growing concern over the issue. Last week, the government said it would re-impose a sales tax on homes sold within five years to curb speculative purchases.
According to the National Bureau of Statistics, property prices in the country's 70 major cities rose by 5.7 percent year-on-year in November. But in some key cities, such as Beijing, Shanghai and Shenzhen, they have jumped by more than 50 percent this year, fueling concerns that a property bubble is building up.
China is not likely to take "heavy-handed policy measures" next year because "any sharp correction in the property market may hamper overall economic growth", Fitch Ratings said in a report yesterday.
"However, there may be some fine-tuning measures from the middle of next year when economic conditions are likely to have reached a point of greater stabilization," said Michael Wu, director of the agency's Asia Pacific corporates team.
The policy objective of the central government is to deflate potential bubbles and send early warning signals to investors and property developers, he added.
Fitch notes that without substantial tightening policy measures, market sentiment should be relatively stable, and that property prices are likely to move within a tight range. However, a strong performance in sales and profit margins is unlikely to recur in 2010.
(China Daily 12/16/2009 page13)
