Property market to cool

The property sector is one of the targets of the government's tightening policy. The Chinese authorities have made it clear that they will step up scrutiny of property lending to curb "overly rapid" price gains in some cities.

The banking regulator yesterday warned against the risks of excessive borrowing by land developers. A housing official also said property prices in the country's rich coastal cities were too high.

Policymakers had already scaled back some incentives that spurred record sales in the domestic property sector before the RRR hike.

If Chinese banks cut back on mortgage lending, this would mean fewer property purchases and, ultimately, lower prices.

"Whatever the government does to curtail the surge in property prices is good for me," said Song Zhiqiong, a 28-year-old administrative staff member at Beihang University.

"Maybe the policy will help me to realize my purchase plan sooner. I'm really looking forward to a fall in property prices, on which my plan of starting my own family is largely dependent."

"I planned to buy a house late last year but the soaring prices forced me to wait and see. I think minor adjustments will hardly affect these developers," said Ma Xiaonan, a 26-year-old office worker in Guangzhou.

"The Chinese property sector will continue to underperform the major indexes in the Shanghai and Hong Kong stock markets in the run-up to the National People's Congress meeting in March," JP Morgan's property research team said.

(China Daily January 14, 2010)