Property bubble limited to some cities: official
(AP)
Updated: 2005-10-24 08:54

China is experiencing a property bubble in some cities but it is not a nationwide phenomenon and the government is moving cautiously in reining in prices.

Residents in Nanjing, capital of East China's Nanjing Province, walk past a newly-constructed apartment building May 10, 2005. [newsphoto]

"Only some cities are experiencing a bubble and it's only in some cities that housing prices are rising relatively fast, but not in all cities," Zheng Jingping, National Bureau of Statistics spokesman, said.

"We want to regulate and curb excessive rises in housing prices but we're not absolutely intent on pulling down prices," he said as he delivered third-quarter growth figures.

Zheng did not specify which cities are experiencing a bubble but Shanghai is widely seen as a center of speculative activity.

Many economists have warned that some mainland cities are building up a dangerous property bubble that will eventually deflate, with severe consequences for the rest of the economy.

The government introduced measures in April aimed at cooling unrestrained growth in the sector.

Measures vary from city to city and include a capital gains tax depending on the length of a buyer's holding period, the banning of pre-completion sales and a tightening of land-use rights.

Shanghai this year enacted rules requiring home owners to pay off their mortgages before they can sell a property, while in March the floor lending rate for housing loans of five years or more was raised 20 basis points to 5.51 percent.

Homebuyers are now also required to come up with a down payment of 30 percent of the price, up from 20.

In another development, annual growth in urban Chinese property prices eased for a second straight month in September amid government efforts to cool the real estate sector, official figures showed Friday.

Overall property prices across 70 cities rose 5.5 percent in September from a year earlier, after rising an annual 6.3 percent in August and 6.4 percent in July, the National Development and Reform Commission said in a report on its Web site.

Compared with the previous month, overall property prices rose 0.6 percent in September, after rising 0.7 percent on the month in August and 0.4 percent in July.

Of the 70 cities included in the survey, 15 recorded falling prices on the month, led by a 1.2 percent drop in Shanghai, where prices fell 2.7 percent in July.

Annual property investment growth has slowed steadily to 22.2 percent in the January to September period from 26.7 percent in the first quarter.