The uproar over the central bank's tight rein on loans to the property market will keep echoing as long as most real estate developers delay adapting their financing plans to the credit squeeze.

But the government's latest declaration of its stand against sky-rocketing housing prices should put an end to overheated investment in housing, particularly in the high-end sector.

The State Council issued a circular recently promoting the sound and sustained development of the nation's real estate market.

The circular was a disappointing answer to troubled real estate developers who had pinned much of their hope on higher authorities checking the central bank's plan to strengthen credit control, which was announced in June.

It specified that, at present, excessive increases in housing prices and investment are an impediment to the sound and sustained development of the country's property market.

Due to worries over domestic commercial banks' heavy exposure to the property market, the People's Bank of China, the country's central bank, had asked those banks to check the breakneck expansion of real estate loans with high-handed measures like increasing the down payment for buyers of second homes and luxury houses.

Those risk-control moves have since sparked bitter criticism by real estate developers, who insist an ample credit supply is crucial for the real estate sector, in spite of the striking gap between jaw-dropping housing prices and the local income level in some cities.

However, such a furore has not blinded the central government from recognizing that long-term growth in this sector requires the balanced development of various real estate projects that can meet the needs of the majority of the people.

The new circular correctly highlights the significance of the housing sector as a key growth engine for the national economy, and its emphasis on urban planning and regulation of land supply demonstrates the policy-makers have heeded the concerns of real estate developers.

Now it is time for investors to take a second look at their expensive housing projects that are still in the planning stages.

(HK Edition 09/03/2003 page5)