Sunday 25 September 2016

Chinese warned over credit-fuelled house price bubble

Bloomberg News

Published 15/09/2016 | 02:30

Cities including Shanghai are trying to calm the property market
Cities including Shanghai are trying to calm the property market

China should take steps to restrain bubble-like expansion in housing markets and tame excessive financial inflows into property, according to a central bank economist.

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"Measures should be taken to put a brake on the excessive bubble expansion in the property sector, and we should curb excessive financing into the real estate sector," Ma Jun, chief economist of the People's Bank of China's (PBOC) research bureau, said in an interview with China Business News.

A third of the financial-system leverage added over the past decade has come from the surge of housing prices, Ma said.

Cities from Shanghai to Shenzhen have been rolling out tightening measures this year as local officials tackle overheating that followed monetary stimulus.

Central bank policy makers are grappling with how to support growth without spurring unsustainable price gains in housing and other assets. The PBOC's easing cycle since late 2014 included a series of cuts that pushed interest rates to record lows, where they've been since October.

"The PBOC will be very cautious about the impact of further monetary policy easing," said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. The central bank "is wary of the overheating property market and fast-rising mortgage loans".

In a separate twist to the health or otherwise of China's property market, the Shanghai Daily has reported that the city's municipal commission of housing and urban-rural development has initiated an investigation into real estate agents accused of spreading rumours about government property restrictions that have affected the stability of the city's housing market.

Seven Shanghai real estate agents were detained last week for spreading rumours of imminent restrictions to the property market. The rumours, which had begun last month, claimed a policy would be introduced this month to impose higher minimum down payments on mortgages for people divorced less than a year. Government officials denied such measures were being considered. (Bloomberg)

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