July 4, 2012 / 1:51 AM / in 7 years

China must take more property tightening action-paper

BEIJING, July 4 (Reuters) - China must roll out new measures to combat speculative housing demand as risks of a home price rebound rise, the official People’s Daily said in a commentary published on Wednesday.

More than 30 local governments in the last few months have relaxed some of the property curbs Beijing had mandated previously in a two-year campaign to cool the country’s red-hot housing market where prices have been pushed well beyond the reach of many middle class families.

The People’s Daily said Beijing should closely monitor the local governments which had relaxed curbs and demand action if a big rebound in prices and complaints from home buyers occurs.

The newspaper is the mouthpiece of China’s ruling Communist Party and its comments weigh on market sentiment as well as investors’ expectations for policy.

China’s property transactions have been rising since March and a private survey on Monday showed home prices snapped a nine-month losing streak and inched up in June.

“The risk of a home price rebound is quickly accumulating which deserves high attention,” the People’s Daily said. “Usually, the trend in home prices will reverse after three to six straight months of turnaround in property transactions.”

China’s Vice Premier Li Keqiang reiterated on Sunday the country would stick to home purchase restrictions, becoming the latest top official to reject calls for relaxation in property tightening steps as a way of bolstering the slowing economy.

Restrictions already in place include capping the number of homes a family can buy, higher mortgage rates for people buying second homes and higher down payments.

“While firming up their stance, relevant government departments also need to issue more measures,” the newspaper said.

“It is something (the government) must do to keep its promise to the people and to restructure economic development,” the paper added.

Premier Wen Jiabao has repeatedly pledged that property curbs will remain in place until home prices return to what he describes as “reasonable levels”.

“It does not only concern the interests of a few people and a few localities. It is also an important issue about pushing ahead structural reforms, increasing people’s trust of the government and solidifying the ruling foundation of the government.” (Reporting by Langi Chiang and Nick Edwards; Editing by Jacqueline Wong)

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