China | China's top central banker warns against hot property prices
People's Bank of China Governor Zhou Xiaochuan speaks on a panel at the annual meetings of the IMF and World Bank Group in Washington on October 7, 2016. Reuters
People's Bank of China Governor Zhou Xiaochuan speaks on a panel at the annual meetings of the IMF and World Bank Group in Washington on October 7, 2016. Reuters

China’s top central banker warns against hot property prices

Zhou says Beijing is paying close attention to rising home prices will take appropriate measures to promote the property market's healthy development

October 9, 2016 2:51 PM (UTC+8)

China’s central bank governor has stepped up the rhetoric against rapid rises in home prices and continued credit growth, signaling further action on top of recent fresh curbs across a number of cities to cool their overheated real estate markets.

Zhou Xiaochuan, governor of the People’s Bank of China (PBOC), said the Chinese government is “paying close attention” to rising property prices in some cities and will take appropriate measures to promote the real estate market’s “healthy development”.

The remarks were made at a G20 meeting in Washington last week and released by the PBOC on its website on Saturday.

A number of Chinese cities including Beijing, Guangzhou, Shenzhen, Nanjing, Chengdu and Wuhan announced new restrictions on property purchases and mortgage downpayments during China’s week-long National Day holiday. The moves came as part of an effort to ward off property speculation.

Late on Saturday and on Sunday a new wave of cities followed suit. Shanghai’s government said in a statement that it would increase land supply for commercial housing construction and step up supervision over the purchase of pre-owned homes that had never been used.

Nanchang, the capital of east China’s Jiangxi province, on Saturday put restrictions on the number of new homes that people can purchase in some districts, and increased the required downpayment for first-time buyers to 30 percent from 20 percent, the official Xinhua News Agency said.

Authorities in Nanjing and Wuxi also adjusted downpayment requirements on Sunday.

Vice finance minister Zhu Guangyao echoed Zhou’s remarks, saying the government’s targeted measures to curb hot property prices were “timely and appropriate”, according to a Xinhua report late on Saturday.

The two top officials’ latest comments signaled that Beijing will continue to target property speculators and curb credit risks in the real estate sector to prevent bubbles.

While a property boom has helped to support China’s economic growth, fueling demand for everything from construction materials to furniture, it is seen as adding credit risks to the banking system and China’s debt problem.

Zhou told the G20 meeting China will control credit growth as the global economy recovers.

The International Monetary Fund said in August that China needed to slow credit growth and stop funding weak firms, highlighting the worries among policymakers about the dangers of an unsustainable debt buildup triggering a banking crisis.

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