In a recent bid to end speculation in its property market, China is gearing up to increase its financial regulation and stabilise the market.
Regulators at the Ministry of Land and Resources (MLR), the People’s Bank of China (PBOC) and the Ministry of Housing and Urban-Rural Development (MHURD) have got together to set out a series of goals that need to be achieved in order to stabilise property prices.
According to state television channel CCTV, the move to crack down on property speculation signals renewed efforts to reduce risks from a rapid build-up in debt in the national economy.
The Chinese property market has been booming for the past two years, which has created fears of a price bubble. The government has implemented numerous measures in the last 12 months to limit speculative purchases (including larger deposits), and this latest round of regulation is aimed to help that.
The country is also hoping to manage the land market better to try and stop high land prices pushing up house prices.
A turning point
It is now hoped that price growth will cool in the fourth quarter of the year. According to figures from the Chinese National Bureau of Statistics, the nation’s property market remained stable last month, with prices seeing slower growth year-on-year in 13 of the 15 major cities throughout the country, including Beijing.
However, the most recent figures from the People’s Bank of China showed that loans to the property sector are continuing to grow, albeit at a slower pace, since the curbs were first introduced at the end of 2016.
“Clearly this is a critical turning point of the financial regulations,” said Zhou Hao, an analyst at Commerzbank. “Over the past few years, while the financial risks were rising, the overall regulations were actually behind the curve.”
