SCENARIOS-What next for China to curb property prices?

By Simply Lee Chyen Yee and Langi Chiang

HONG KONG/BEIJING, Jan 14 (Reuters) China will be determined to
curb sharp rises in property prices to end up being able to avoid asset bubbles,
deploying any mixture of credit score tightening measures, increasing
supply involving inexpensive housing along with verbal suasion.
This particular week, China raised its reserve requirement ratio by 0.5
percentage indicate absorb excessive liquidity, at a time when
Chinas property price is rising strongly.
Inside December, urban property prices rose simply by once a year 7.8
percent, marking the particular fastest pace of 2009. [ID:nTOE60D02M]
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following are a new handful of possible measures the Chinese government
might take to rein in the surge within property prices:

RAISE MORTGAGE RATES TO CURB LENDING

A Lot More likely.
Since of a sixth regarding Chinas nearly 10 trillion yuan ($1.5

trillion) within new loans last year went for the property sector,
analysts mentioned one in the most direct way to clamp down speculation was
to manage mortgage lending as well as loans to be able to developers.
Throughout October 2008, the central bank cut the particular minimal mortgage
rate to always be able to 70 percent of its benchmark lending rates, using analysts
saying that the authority may well raise those rates to always be able to around 85
percent as section of efforts in order to clamp upon speculation.
Correct now, mortgage interest minute rates are 0.3 under policy
rate. Which subsidy needs being removed, Andy Xie, an independent
economist who may have warned of your property bubble bursting inside China,
told Reuters Insider.
Apart through significant property lenders, such as China Construction
Bank <601939.SS>, and also apk download Industrial along with Commercial Bank of China
<601398.SS>, developers with good gearing ratio, for example Shanghai
Forte Property Co Ltd <2337.HK> might be hit hard, analysts said.
The Particular negative influence on main developers with plenty of cash,
such as China Vanke <000002.SZ>, will most likely end up being muted, analysts
said.
A Range Of analysts also expect the government for you to raise the
requirement ratio once again inside coming several weeks to aid avoid the
worlds third-largest economy through overheating, additionally to
implementing property-related measures.
State media said the us government had advised banks to avoid giving
commissions for you to property agents pertaining to mortgage clients they
introduce.
LIFTING DOWNPAYMENTS OF SECOND HOMES FROM 40 PCT

Likely.
another possibility can be raising the downpayment of purchasers of
second or perhaps third homes to be able to the extremely least regarding 50 % from 40 percent
now.
This will almost certainly stifle a range of demand, although not by too
much, therefore the negative effect on property developers will be
muted, analysts said.
Just About Any measures they will consider will be gradual because the government
doesnt want to hamper demand inside the market, mentioned a property
analyst, whom declined to be identified.
Therefore far, the actual China Banking Regulatory Commission has denied
media reports that it would create such a transfer within the close to term.
Yet Beijing has recently tweaked its measures to make it very
clear in which it indicates a second home for the total family.
Previously, it had been ambiguous upon in which point and some banks were
counting the retirement home together for just regarding any grown-up member inside the
family.
China has additionally left it unchanged for that first-home purchasers to
enjoy the extremely least 20 % downpayment.
INTRODUCING Any PROPERTY TAX
Least likely.
for years, the government may be stating that it is
considering introducing a new property tax, yet which has not
materialised as some technical problems remain unresolved,
including the registration regarding residential properties.
This will be really dangerous to accomplish it this year, David Ng, head of

regional analysis through RBS said. Its better to launch that inside a
normal environment.
Implementing this kind of tax may also hit the marketplace hard, which
officials would wish to stay away from considering that the particular sector is a key
pillar of the economy.
However, analysts stated Chinese officials may raise the
issue serious amounts of once again as a signal for the marketplace that will it was
looking in to all sorts of measures in order to avoid the sector from
overheating.
(Additional reporting by simply Rafael Nam; Editing by Lincoln Feast)
(See www.reutersrealestate.com for that global services regarding real
estate expert through Reuters)
((chyenyee.lee@thomsonreuters.com; +852 2843-6901; Reuters
Messaging: chyenyee.lee.reuters.com@reuters.net))
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Thursday, 14 January 2010 09:32:58RTRS [nTOE60D02G] ENENDS