China has signalled it will resist calls for aggressive measures to prop up its flagging property market, even as house prices continue to drop.
People’s Daily, the Communist party’s main mouthpiece, said in a commentary yesterday that the property market was in a “normal adjustment period” and accused domestic developers, speculators and foreign banks of exaggerating the slowdown in order to put pressure on authorities to adopt heavy-handed stimulus policies.
“We must be on guard against the ulterior motives of those who are singing short the market – to destabilise the market, mislead policy and satisfy their selfish interests,” the paper said.
Average home prices in China fell 0.2 per cent in May from April, data showed last week, the country’s first monthly decline in two years, though prices are 5.6 per cent higher on a yearly basis. Earlier data showed sales volumes and new construction down in May. Property and related sectors such as furniture contribute about 23 per cent to China’s economic output, Moody’s has estimated.
So far some local governments have loosened purchase restrictions as well as making it easier for home buyers to access earmarked housing funds and borrow at discounted rates. Independent analysts reckon more such steps will be taken rather than more aggressive measures.
“The government is likely to continue the targeted loosening that we’ve seen in recent months, but major action is unlikely. Sales figures will probably stay weak for at least a few more months,” said Rosalea Yao, real estate analyst for GaveKal-Dragonomics, a Beijing-based consultancy.
People’s Daily accused property bears of trying to press Beijing into relaxing house purchase restrictions, loosening credit and implementing other measures to boost the market.
“This way, developers can continue to enjoy profits from high prices and extend their fragile funding chains and house hoarders can also see the wealth they’re sitting on keep increasing,” the paper said.
Foreign investment banks also came in for criticism for their pessimistic assessments. “As for foreign capital planning to speculate on the bottoming out of China’s property market, the practice of singing short the market while actually taking long bets has been their favourite trick for many years and is no longer surprising,” the paper said.
China has made moves in recent weeks to ease monetary conditions and boost spending on under-developed areas and other infrastructure as a way to curb the slowdown in growth.
But some analysts have urged more aggressive action such as an interest-rate cut or a loosening of restrictions on purchasing second and third homes.
Chinese policy makers are trying to strike a balance between preventing a collapse in the property market that would spill into the broader economy, while also not fuelling excessive price gains in a market that has already placed home ownership out of reach for many average Chinese.
“政府很可能继续进行我们在近几个月看到的定向放松，但不太可能采取重大行动。销售数字很可能在至少几个月里保持疲软，”北京咨询公司龙洲经讯(Gavekal Dragonomics)房地产分析师咬丽蔷(Rosealea Yao)表示。