The central bank's recent move to tighten control on real estate loans was a piece of good news for ordinary home buyers, experts say - despite the policy coming under scathing criticism from real estate developers.

The central People's Bank of China issued a circular on June 13, saying commercial banks should limit lending to real estate developers, beef up credit management and increase the downpayments for buyers of second and luxury homes. The policy got real estate developers firing last week.

Ren Zhiqiang, chairman of the Beijing Huayuan Property Co Ltd, says it is a clamp down on the real estate market.

Another Beijing-based developer said through its move, the central bank has forced them to increase housing prices.

But Li Yang, a senior economist with the Chinese Academy of Social Sciences, said the policy is aimed at helping more people buy satisfactory accommodation.

"A new monetary policy usually considers the interests of vast ordinary people first and not that of real estate developers," he said.

According to the policy, commercial banks are only allowed to lend to home buyers who want to acquire finished housing.

"This will help reduce purchasing risks and interest burdens for ordinary home buyers," said Niu Li, a senior economist with the State Information Centre.

Zhang Yan, a 29-year-old State employee from Beijing's Dongcheng District, said if the central bank had introduced the policy earlier, she would not have been cheated by developers.

Zhang bought an unfinished home two years ago, but later found out that the floor space was less than she paid for.

Analysts from real estate consultant Jones Lang Lasalle said the policy is mainly targetting poor quality and low credit real estate developers, and those in the high-end housing market.

"It seems that the high bank non-performing loans and high luxury housing vacancy rates triggered the new alert," one analyst said.

Real estate loans in China have been growing rapidly in recent years. The level of outstanding real estate loans reached 1.8 trillion yuan (US$216 billion) by the end of April, accounting for 17.6 per cent of all commercial bank loans.

As much as 80 per cent of the loans were granted in the past two years, which helped spur the property market, said Dai Genyou, director of the central bank's Monetary Policy Department.

Wang Zhao, a researcher with the Development Research Centre under the State Council, said the implementation of the policy suggests the central bank has begun to take active measures to curb overheated real estate development in some areas.

According the National Bureau of Statistics, China's real estate investment grew a year-on-year 32.9 per cent to 280.1 billion yuan (US$33.7 billion) during the first five months of this year, much faster than the growth in gross domestic product, which stood at 9.9 per cent in the first quarter.

The rapid investment resulted in more vacant homes, the bureau said.

During the first five months of the year, vacancies grew 9.2 per cent compared with the same period last year.

Experts from the China Real Estate Association estimate there may be 130 million square metres of vacant housing, accounting for about 19 per cent of the country's total floor space in private homes.

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