Chinese house sales and prices rose sharply in May according to a whole host of reports. Any one of several reports will confirm the growth, but some reports differ on predictions for the future. Some reports believe the rise happened because local authorities have been finding ways to ease up on the governments' restrictions without triggering the government's alarm and having them close the gap back up, and others believe it is more to do with the central government's recent monetary easing including reduced interest rates.
Either way, analysts are now worrying that another crack down on the property market could be just around the corner. Some reports have suggested that the central government may have been complicit in allowing the restrictions to be eased at the local level, or certainly have turned a blind eye to it. This is suggested by the fact that some authorities have quickly had their loosening measures reversed, while others have been allowed to continue, although there are clear distinctions on the types of easing which have been allowed, which throw doubt on this belief.
China Business Herald recently reported that more than 30 cities (including Beijing) have "fine tuned" their real estate policies in order to boost the market since the latter part of last year. These policies have included: more favourable interest rates for first-time buyers, loosening of the upper limit for house buyers who use low-interest provident fund loans and transaction-related taxes and fees reduction. According to China's largest real estate website Soufun, only 5 of those cities have had their fine-tuning policies reversed.
"As seen from the current situation, if the local governments say they are not fine-tuning, it is unlikely that the central government will probe further," Xue Jianxiong, research director of CRIC China, was quoted by China Business Herald as saying.
But not all analysts are so quick to believe that the government is on board with the price rises. Du Jin Song, real estate analyst at Credit Suisse, who had predicted a 10% reduction in prices this year, but now believes prices will rise in the second and third quarters, is worried that prices could surge and bring renewed action from the government.
"In a few months, once (Chinese) economic data becomes better and the central government has more room to adjust the economy, (the government) may face a difficult choice on whether to come down hard on rising housing prices again, so the policy risk is still there," Du said.