CREA: China unlikely to boost housing market in short term

(Xinhua)
Updated: 2008-08-23 21:26

BEIJING - The China Real Estate Association (CREA) has denied claims that the government will act to bolster the housing market by freeing up financing.

A report in the China Business Journal on Saturday quoted an unnamed CREA official as saying the government would let market forces determine the course of the housing sector.

The CREA official rejected a report in the Shanghai-based Oriental Post earlier in the week that Wang Yiming, a researcher with the National Development and Reform Commission, had said the government might work out policies to boost the real estate market.

The CREA official reportedly said this "is impossible" as land agents had sent submissions to the government, seeking looser credit regulation and lower taxes, but no positive response had been received.

Experts attributed the unfavorable response to the sound business conditions of banks, indicating that the real estate sector's fall was not serious enough for the government to take action.

The leading commercial banks still posted solid earnings in the first half. The largest lender, the Industrial and Commercial Bank of China (ICBC), said on Thursday its first half after-tax profits totaled 64.88 billion yuan (US$9.47 billion), which made it the world's most profitable bank.

An imbalance in supply and demand had led to falling housing prices. Many homebuyers were reportedly in negative equity with their mortgages and were abandoning their homes to banks.

Many developers had to lend large amounts from banks, and the overstock of houses would force them to default. All of these would lead to a possible credit crisis for banks.

The country's real estate developers sold about 260 million sq m houses in the first six months, representing an decrease of 7.2 percent over the same period last year. Meanwhile, vacant houses totaled 129 million sq m by the end of July, up 6.1 percent on year.