Special Report: China moves to curb soaring house prices

    BEIJING, June 15 -- Property prices in China's major cities kept rising in May, one month before the latest round of macro control measures were introduced, government figures show.

    Property prices in 70 large cities rose by 5.8 per cent year-on-year, 0.7 percentage points higher than the growth rate in April, according to a survey released yesterday by the National Development and Reform Commission and the National Bureau of Statistics.

    Prices for newly built homes climbed 6.1 per cent last month from a year earlier, 0.3 percentage points lower than the previous month, the statistics showed.

    Residential property prices in Dalian, a coastal city in Northeast China's Liaoning Province, climbed 15.2 per cent year-on-year in May, the highest increase among the 70 cities surveyed.

    Next came Shenzen, a booming city in South China's Pearl River Delta region, which reported a 13.7 per cent year-on-year increase in residential property prices.

    Housing prices in Beijing rose 9 per cent year-on-year in May.

    The statistics showed that six cities saw residential housing prices falling in May from the previous month.

    Shanghai witnessed the prices of apartments dropping by 6.2 per cent compared with the same period last year.

    "My sense is that the real price rises are much higher than the reported figures," said Yi Xianrong, a researcher with the Chinese Academy of Social Sciences and a long critic of the property market.

    "But these figures do show the need for strong government action," he said.

    Effective from June 1, the minimum down payment for an apartment larger than 90 square metres was raised from the previous 20 per cent to 30 per cent.

    The down payment ratio for apartments smaller than 90 square metres remained unchanged at 20 per cent.

    Also effective from June 1, anyone who resells their property within five years of purchase is required to pay a 5.5 per cent transaction tax on the sale value of the property

    Continuously rising real estate prices have led many economists to call for decisive government action to adjust the property market, which they said was overheated.

    The central government has introduced a series of measures since April to try to cool the market down.

    The central bank raised the one-year benchmark lending rate by 27 base points to 5.85 per cent, a move seen by many as aimed at curbing the robust lending to the housing sector.

    In an executive meeting chaired by Premier Wen Jiabao on May 17, the cabinet vowed to use "a mix of tax, credit and land policies" to maintain the healthy development of the property market, which was identified as a pillar industry in the national economy.

    And on May 29, the central government announced a series of measures, described by experts and industry watchers as the "most detailed and specific policy" ever made by the government.

    "It will be quite hard to predict what impact all these policies will have on housing price trends in the coming months," said Wang Chen, a senior manager in Beijing with the global real estate consulting services provider DTZ.

    "It depends on how effectively these policies are enforced by local governments," he added.

    The price of a second-hand property increased on average by 6.7 per cent year-on-year in May, 0.9 percentage points higher than the previous month.

    The price of non-residential properties in the 70 cities such as office buildings and warehouses rose 4.4 per cent year-on-year in May, according to the statistics.

    (Source: China Daily)