December 13, 2012 / 12:55 PM / 5 years ago

China must thwart big jump in home prices - think-tank

BEIJING, Dec 13 (Reuters) - China should enforce new property controls next year to curb speculation and prevent an expected modest recovery in house prices from turning into a steep rebound, a top state think-tank said on Thursday.

The Chinese Academy of Social Sciences called on the government to expand property taxes to more cities and stop developers from getting too much financing by barring them from selling homes before they are built.

“If the central government does not take effective measures next year, home prices risk a sharp rebound again in most cities due to a turn in market sentiment and policy tweaks of local governments,” the think-tank said.

China’s property market has shown signs of perking up in recent months as Beijing lowered interest rates twice this year to shore up economic growth. Some local governments have also relaxed property controls to boost home sales.

The think-tank also warned of dangers of steep house price falls in some cities where property markets are frothy, but it did not identify those cities.

“The central government should reiterate its unswerving stance to rein in the property market and unveil targeted measures in time,” it said.

Its recommendations are in line with Beijing’s plans to retain property controls in 2013 to ensure China’s house prices do not revisit record highs seen in previous years and sow widespread social discontent.

China’s crackdown on property speculation, stretching into its third year, has centred around reducing financing for buyers and limiting the number of homes people can own.

Property prices soared in China after the 2008/09 financial crisis when local governments started selling swathes of land to raise cash for infrastructure investment under Beijing’s 4 trillion yuan ($635 billion) stimulus programme.

After a lull this year, property prices appear to have revived. A private survey showed this month that China’s home prices edged up for a sixth straight month in November. (Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Robert Birsel)

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