BEIJING (Reuters) – China’s premier reiterated calls on Sunday for the country to maintain its campaign to cool down its property market, a series of controls on credit and purchases that have begun to drive down housing prices.
“Property market controls are still at a crucial stage, the task of adjustment is arduous and we must keep policy stable. Localities must pay attention to this point,” said Wen Jiabao, in comments reported on Chinese state radio.
“We must strictly implement differentiated housing credit and tax policies, as well as restrictions on home purchases. We must never allow property controls to suffer a setback, or else our achievements through many years of hard work will come to nothing,” he added.
Chinese home prices fell in April for a second month in a row compared with year ago levels. Average home prices in 70 major cities fell 1.2 percent from a year earlier, after a 0.7 percent fall in March.
Wen’s comments appeared to be aimed at local governments, many of which badly need the proceeds from land sales to repay maturing debts and would like to see Beijing roll back its property rules.
Some localities have tweaked those rules to spur housing transactions while trying to avoid violating Wen’s restrictions on multiple home purchases, which are at the core of the tightening campaign.
Some have so far won the central leaders’ consent, although efforts in Shanghai and a third-tier city of Wuhu were revoked within days.
China started its tightening of the property market towards the end of 2009, after house prices surged in many cities and put home ownership out of reach for much of China’s burgeoning middle class.
Prices had been boosted in large part by a 4 trillion yuan government stimulus package launched during the global financial crisis.
Wen has since vowed repeatedly to drive home prices back down to a reasonable level, aiming to ensure social stability during this year’s once-in-a-decade reshuffle of the Communist Party’s top leadership.
A Reuters poll in April showed economists expected a further fall in home prices of 10 to 20 percent in the April-December period, after a slip of 5 percent in the first three months of the year.
(Reporting by Sabrina Mao and Don Durfee; Editing by Greg Mahlich)