Policies to deflate bubble

Also Dubai did not have a series of government policies implemented to stop the bubble at an early stage.

China had made several moves in the last month to do just this, including reimposing a sales tax on homes sold within five years of their purchase from this year and increasing the down payment requirement for property purchases to at least 50 percent of the total price.

The latest one came from the State Council, China's cabinet, which issued guidelines over the weekend that raises the down payment requirement to no less than 40 percent for those families applying to buy a second or more houses backed with loans, and the mortgage rates should be strictly settled on the basis of loan risks.

In another move to cool the property market, the People's Bank of China, the central bank, announced on Tuesday to raise the deposit reserve requirement ratio by 0.5 percentage points from Jan. 18 this year.

The government also renewed its pledge on Wednesday to stabilize home prices by providing more affordable housing and cracking down on speculation.

"Such moves demonstrated the determination of the government to constrain the rising property prices," said Yang.

Awaiting the effects

A sharp fall in sales of second-hand houses resulted from previous policies.

In Beijing, only 19 second-hand homes were sold daily from January 1 to January 3, right after a sales tax was extended to homes sold within five years of their purchase, which was well below the number sold at the end of last year, according to data from Beijing Municipal Commission of Housing and Urban-Rural Development.

However, experts have pointed out that the property market still needs time to react, especially in terms of prices.

Besides, it was one matter that the policies were made, but it was another as to whether they would be fully implemented, said experts.

Pan Shiyi, chairman of China's leading property developer, SOHOChina, said of the 11 specific measures included in the State Council guidelines, the last one was important as it emphasized the responsibility of local governments to carry out the previous ten.

"Whether the desired effects can be achieved would depend to what extent and with what intensity the policies would be enforced," said Yi Xianrong.

(Xinhua News Agency January 14, 2010)