China should stop property stimulus now, says newspaper

BEIJING: China should immediately halt some of its real estate stimulus policies, or risk inflating a bubble that in its bursting would wreak financial and even social trouble, a government newspaper said on Nov 23.

An opinion piece in the Financial News, a newspaper published by the central bank, said rampant speculation in the country's property market was akin to a time bomb that could threaten future growth.

"If China does not exit its stimulus policy... property prices and the market may go out of control," it said.

China's housing prices have been rising since March propelled by a slew of government measures, from lower downpayments and mortgage rates to tax cuts.

Rising prices have encouraged developers to break ground on new projects, with real estate investment up an annual 18.9% in the first 10 months of the year, compared with a mere 1% rise in the first two months.

While the government has welcomed this surge in building activity, which is an important pillar of the economy, some officials now worry that property development is outstripping end-user demand in some locales and that prices are not affordable for ordinary citizens.

The article noted that expectations of a wind-down in stimulus policies were, in part, driving current transaction levels. November, traditionally a slack month, had been busy as people front-loaded purchases before a value-added tax exemption expired at end of the year, it said. -- Reuters