BEIJING Aug 7 More than half of China's cities
have relaxed property controls and analysts say more are
expected to follow, suggesting the central government is easing
its grip on the sector as the cooling housing market poses a
growing threat to the economy.
Foshan, a southern city in Guangdong Province, relaxed
restrictions on Thursday that limited the number of homes that
residents can buy, the government said on its Weibo microblog.
With Foshan's move, at least 28 regional governments in
small- to mid-sized Chinese cities have openly or quietly
relaxed home purchase restrictions this year, data from private
property consultancies showed.
This means that over half of China's 46 local governments
have scrapped limits on the number of homes that Chinese can
buy, in a bid to support economic growth.
In the last few years, local attempts to relax restrictions
on the housing market unilaterally have often displeased Beijing
and tougher measures were quickly put back in place.
But analysts say the increasing number of local governments
which are unwinding controls now signals that Beijing is giving
them the green light to bolster the troubled property market.
The central government had been waging a five-year campaign
to curb red-hot housing prices and keep homes affortable.
"Given the central government's tolerance for greater policy
loosening in recent months, a further easing in purchase
restrictions is expected in smaller cities," Carlby Xie, a
research director at real estate services company Colliers, said
in a statement.
But with home prices still near all-time highs, some
analysts are voicing worries that China may have buckled too
much amid pressure to safeguard the economy, at the expense of
calming a frothy housing market.
Fitch Ratings warned on Thursday that the loosening of
property curbs, together with an easing in overall monetary
policy, may stoke property speculation yet again.
To cool a bubbly housing market, China started in late 2009
a campaign to temper home prices that involved raising
downpayment levels, mortgages rates and imposing home-buying
Yet the controls have had a mixed record in delivering
Since 2009, home prices hit records highs in every year
except 2012, and it was only this year when China's economic
growth ground towards a 24-year-low that the housing market
finally lost some steam.
Following last year's unusually strong performance, average
home prices have fallen on a monthly basis since May, while new
construction starts have tumbled.
Worried that record-low home affordability rates will cause
social unrest, China's central government has resisted a
nationwide relaxation of the curbs in the property market.
Indeed, some experts said a broad relaxation in housing
controls are unlikely to be carried out in the biggest cities of
Beijing and Shanghai, where record-high home prices have sown
But the hold-out has been painful for local governments,
which benefit from a buoyant property market through revenues
earned from selling land.
Analysts said easier housing policies will stabilise the
market, though prices would not bounce back anytime soon.
"For those cities where there is an oversupply, a further
price correction is inevitable," Colliers' Xie said.
(Editing by Kim Coghill)