China says will keep curbing property market
Posted: 27 October 2010 1949 hrs

BEIJING: China on Wednesday pledged to continue its efforts to cool the red-hot real estate market for the rest of the year after the latest official data showed property prices remained buoyant.

The State Council called on local governments to step up supplies of subsidised public housing and curb speculation in the property market, according to a statement posted on the cabinet's website.

It reiterated local governments must put into action measures to cool the real estate market and said China would "firmly curb overly rapid property price increases in some cities".

The pledge came after official data showed property prices in major Chinese cities rose 0.5 percent in September from the previous month, the first month-on-month increase since May.

The rise defied a slew of tightening steps taken by Beijing since April to cap real estate prices and prevent an asset bubble, including higher down-payment requirements and mortgage rates.

The statement, summarising Beijing's key economic work for the rest of the year as outlined at a meeting chaired by Premier Wen Jiabao on Monday, also said the government aimed to keep prices stable, amid ballooning inflation.

China is "faced with a very complex international environment and increasing external challenges, which makes macro policy-tuning more demanding," the statement said.

Consumer prices have been picking up in recent months and rose at their fastest pace in nearly two years in September, up 3.6 percent from a year earlier.

In a surprise move last week, the People's Bank of China announced it would raise one-year lending and deposit rates for the first time since 2007 as it tries to curb soaring property prices and bank lending.

"There is still relatively strong momentum for domestic credit to keep expanding," central bank governor Zhou Xiaochuan said in a speech posted on its website on Thursday last week.

"Cross-border capital flows contain potential risks (and) macroeconomic risks including excessive liquidity, inflation, asset price bubbles, cyclical rises in bad loans will increase significantly."

The decision to raise rates came as inflation, property prices and bank lending rose in September, defying official efforts to dampen all three and fuelling fears of a damaging bubble and a potential new crop of bad loans.

- AFP/ir