Real estate stocks jumped yesterday on news that China will cut transaction fees for home sales to spur buyers but experts are doubtful that the policy can reverse the declining trend in the market.

China's State Council announced on Sunday measures to maintain economic growth in the fourth quarter in the face of a global financial crisis, including cutting transaction fees to promote home sales.

"It is the first time since 2003 that the central government has changed its attitude from restricting development of the real estate market to boosting it," said Yin Zi, an analyst at Shenyin & Wanguo Securities Co.

"China's exports faced a bigger pressure when the global economy turned sluggish, so the government hoped that boosting the real estate sector can stimulate consumption to balance weaker exports and keep the economy growing," Yin said.

But the policy can only prevent a sharp fall in housing prices in the short term rather than change the downward trend, Yin pointed out.

The move is in line with provincial governments' efforts to revive the market. Shanghai has raised the ceiling of mortgage lending in the city's housing fund program by as much as 20 percent for some households. These families can get a maximum loan of 600,000 yuan, up from 500,000 yuan, for their first private property.

The central government is expected to issue more policies such as easing conditions for a mortgage for a second home, lowering loan interest and reducing the down payment.

Housing prices in the country's 70 big and middle-sized cities rose 8.5 percent in the first three quarters of this year, the National Bureau of Statistics said yesterday.

The average price for September rose 3.5 percent, compared with 5.3 percent in August, the bureau said.

"It's too early for the government to stimulate the real estate market, which may form a bubble and increase risks for financial firms," said analyst An Yun at Shenyin & Wanguo.

(Shanghai Daily October 21, 2008)