Curbing property speculation
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Recent government measures to stem rising housing prices will change supply and demand to cool market expectations
The State Council, the country's Cabinet, rolled out a series of harsh measures over the weekend in the latest bid to curb soaring home prices.
In the past year, a string of policies and measures by the central government had failed to keep a lid on property speculation and an increasing number of ordinary homebuyers have become dissatisfied with the situation.
The latest move shows that the central government will fundamentally correct the long-standing stereotype of the real estate sector as a pillar industry of the national economy, and as an effective tool to stimulate and regulate the country's economic development.
A new approach has emerged among decision makers - that the housing problem is not only a major economic issue, but one that is closely related to people's livelihood and is likely to cause social instability if not handled effectively.
The authorities are seriously concerned about the negative impact of high housing prices on the basic living conditions of the majority of ordinary people and the huge risks these pose to the country's financial institutions.
The flow of excessive wealth into the real estate sector is also detrimental to the coordinated development of the national economy. The unprecedented importance attached by the central government to the risks of high home prices highlights top authorities' determination to cool widespread speculation in the sector.
Expansive credit policy has proven to fuel property bubbles, at home and abroad.
Statistics show that the volume of China's private loans from banks hit 2.46 trillion yuan last year, four times the amount of the previous year's 600 billion yuan. In the first quarter of this year, an additional 902 billion yuan of private lending was approved, more than twice the 422.3 billion yuan in the same period of last year.
A large portion of the combined 3.4 trillion yuan of personal loans in the past 15 months have reportedly been pumped into the country's real estate market, directly fueling the rapid rise of property prices. The excessively loose credit environment since the latter half of 2008 has converted the country's real estate sector into a speculator's heaven, much like the stock market.
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