New policy targets real estate prices

The State Council, China's cabinet, on Friday unveiled policy details aimed at reining in the country's property market, which has seen renewed signs of a rebound.

The policy details, released on the last weekday before the annual sessions of the top legislature and top political advisory group, highlight a series of tougher measures including imposing stricter income tax rules for home sellers and raising down payment rates for second home buyers.

Currently, the nation's property market control is at a crucial stage, given rising expectations for home price hikes and dividing market trends seen in different parts of the country, although the central government's property control efforts since 2011 have proved effective, the State Council said in a statement outlining the detailed measures, following its announcement of five general curbing principles on February 20.

"The policy details signal further tightening of the property market, and some specific rules including raising down payment rates and mortgage interest rates for second home buyers, and increasing home and land supply will definitely be beneficial to curbing home prices," Lu Zhengwei, Shanghai-based chief economist with Industrial Bank Co, told the Global Times Friday.

The average new home price across 100 major cites went up 0.83 percent in February from January, the ninth consecutive month continuing an upward trend, according to figures released Friday by Beijing-based real estate research institute China Index Academy.

With the toughly worded declaration of detailed rules, activity in the nation's property market is estimated to fall in the near future, Yang Hongxu, vice president of E-house China's R&D Institute, a Shanghai based consultancy, said on his Sina Weibo on Friday.

Believing that local governments and perhaps some departments will unveil more details, expected later in March, Yang forecast that both the volume of sold homes and rise in home prices may see a moderation in the second quarter.

The growth moderation in secondhand home prices is projected to be more severe than new home prices, and big cities are more likely to see a cooling off in the property sector, according to Yang.

However, a number of industry watchers are taking the detailed measures with a grain of salt.

"The effect of the details remains to be seen, as the implementation of the central government's curbing calls, as always, still depends on local governments," Hui Jianqiang, research director with fangchan.com, a Beijing-based real estate information provider, told the Global Times Friday.

"Home prices are unlikely to be impacted by such measures, but will rather see slight upward revisions this year," Hui predicted.

Lu also played down the possibility of any major fluctuations in home prices, stressing that some of the specific rules may prove to be less helpful than expected in containing home prices.