Property Stocks Fall on Price Curbs Plan, by Jianguo Jiang

The government will restrict land for expensive housing and offer easier credit for low-cost homes, aiming to “correct'’ distortions in the property market, state-run China Central Television reported last night. The government must do more to cool property prices and make it easier for people to afford low- to moderate-cost housing, CCTV reported. The government will use tax measures and will boost supervision to curb the amount of land used to develop luxury homes, according to the report.

China has restricted lending for property since April 2003 out of concern that prices and investment were rising too fast, raising the risk of a collapse that could drive up bad loans at banks and derail economic growth.

The central bank in March 2005 raised the down-payment ratio for home buyers in some areas and increased the minimum mortgage rate. The central government in June ordered cities to start imposing a 5 percent tax on the value of home sales.

The government may restrict overseas investment in real estate to help cool prices, analysts said. Overseas investors bought at least $500 million of completed income-producing property in China in the first quarter, compared with $1.2 billion in all of 2005, according to CB Richard Ellis Group Inc.

My favorite proxy for the Mainland property market is R&F Properties… when its trend reverses I’ll know the top is in.

Related:
Beijing Property — Haves and Have-Nots
Guangzhou R&F Properties, Ltd.

Andrew Browne in today’s WSJ, “China Seeks to Damp Real-Estate Prices With Taxes on Profits”

“The cabinet urged local governments to offer more price information. In the absence of transaction data, Chinese buyers often are at the mercy of developers with an interest in inflating prices.”

Before we bought our place I asked for all the data on sales from the past year for our development and was met with a wall of laughter everywhere I turned (including the local government).