Business / Industries

China goes local to soften hit from property downturn

(Agencies) Updated: 2014-05-19 07:59

"It's natural to relax controls if property prices fall. Our purpose is to curb price rises and we should relax if prices no longer rise," said Zhu Baoliang, chief economist at State Information Centre, a top government think-tank.

China goes local to soften hit from property downturn
China goes local to soften hit from property downturn
"I don't think property prices will rise further. On the contrary, the downward pressure is big."

Last week the central bank called on banks to speed up the granting of home loans to first home buyers, although that is seen having only a limited impact.

"We doubt that banks will rush out with mortgages," analysts at Bank of America/Merill Lynch said in a research note.

"Even a meaningful increase in mortgage supply shouldn't fundamentally change the worsening property market conditions."

Many economists believe that if the economy slows further, the central bank will cut banks' reserve requirement ratios around the middle of the year. That would support activity, but it is a broad-brush policy that authorities can't fully control.

"We need to keep liquidity relatively loose to help safeguard economic growth," said Li Huiyong, chief economist at Shenyin & Wanguo Securities in Shanghai.

"But money has no label and we cannot rule out the possibility that money will drive up property prices, even though it has yet to lead to improvement in the economy."

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