BEIJING (Reuters) - China’s policy fine-tuning and ongoing urbanization can help it to avoid a Japan-style property bubble, a senior housing official said, amid fears a housing market crash could lead to a hard landing for the world’s second-largest economy.
Beijing has allowed local governments to take differentiated property tightening measures, rather than a one-size-fits-all bid to cool the market, Vice Housing Minister Qiu Baoxing said in remarks published in the Southern Metropolis Daily.
He said Japan’s property bubble burst in the 1980s, when the country’s urbanization was near an end and it could not generate fresh drivers to keep the market afloat.
“China is some time away from reaching that point. If we understand the issue and adopt fine-tuning policies, things could be turned around,” Qiu was quoted as saying.
China’s housing prices in November soared 9.9 percent from a year earlier - the quickest annual pace on record, according to Reuters calculations based on official data, but signs have emerged that the government’s four-year effort to cool the market may be starting to bear fruit.
Such fast gains have stirred strong debate on whether there is a bubble in China’s real estate market and when it will burst, which could lead the economy to a hard landing.
China’s housing minister said in December that China would maintain controls on its property market in 2014 while increasing land and housing supply in cities facing big home-price increases.
China’s central government did not introduce any nationwide property curbs since the new leadership formally took office in March 2013, but local authorities in some areas have taken targeted steps to try to cool prices, including raising minimum downpayments for second homes and promising more land for building.
Those measures have started to bite, with official figures showing monthly property price gains in November were the slowest this year, pointing to a moderation in rises in the coming months.
But ordinary Chinese in most cities still face home prices that are well beyond their reach as the unrelenting rise has been buoyed by a view that property remains one of the best investments.
Reporting By Xiaoyi Shao and Kevin Yao; Editing by Jacqueline Wong