Senior officials from six ministry-level departments answer questions Wednesday on policies to curb the overheating property market. (Photo: CFP)

The country's six department leaders gathered Wednesday to explain the government's new policies to cool the real estate market, build more affordable and low-rent housing, tighten credit, and ensure the supply of land.

The State Council issued a notice over the weekend ordering central departments and local governments to take concrete measures to curb speculation so as to suppress skyrocketing home prices and to increase the supply of affordable housing.

Construction will start this year on about 6 million policy-supported affordable housing units, Qi Ji, deputy minister of Housing and Urban-Rural Development, said at the department heads' press conference.

Local governments also need to increase the number of small- and medium- sized commercial housing units, Qi said, adding that a balance between supply and demand will help adjust home prices according to market principles.

"We will strictly execute the policy of second-home buyers making no less than a 40 percent down payment so as to control financial risks and suppress speculation," Wang Zhaoxing, vice chairman of the China Banking Regulatory Commission, said.

At present, loans to developers and individual mortgages account for about 20 percent of bank loans, Wang said.

Yun Xiaosu, vice minister of Land and Resources, said the ministry would take actions to ensure the supply of land lots for affordable housing built according to the government's requirements.

At the end of 2009, developers owned 200,000 hectares of land lots, enough to meet development needs for the next two to three years, Yun said.

At the end of 2009, 10,000 hectares of land remained undeveloped, and the Ministry of Land and Resources is requiring local governments to deal with all of them by the end of this month, Yun added.

"The central departments concerned have explained to the public how to execute the State Council's notices, and we will see how the local governments put them into practice," Yang Guohua, an analyst with Hongyuan Securities, said Wednesday.

Yun added that local governments would prefer not to sell land lots for affordable housing as it will bring them lower profits.

The government has released nearly all the policies the market expected, and their impact depends on whether or not they can be fully executed, Yang said.

The policies have already impacted investors' confidence, sending nearly all property shares down Wednesday.

Vanke slumped 2.43 percent to 10.04 yuan ($1.47) on the Shenzhen Stock Exchange, while Poly Real Estate Group declined 4.13 percent to 21.43 yuan ($3.14) on the Shanghai Stock Exchange. And Greentown China Holdings dropped 3.37 percent to HK$10.90 ($1.41 ) in Hong Kong.

In the first week of the month, the total sales volumes in four major first-tier cities, including Beijing and Shenzhen, declined 20 percent over the previous week.

The sales volumes in five more cities, including Hangzhou and Chengdu, declined 44 percent as a whole.

Among the nine cities, only Tianjin, Wuhan and Shanghai saw a slight increase, the research institute of the Centaline Property Agency said.

Editor: Linda

Source: Global Times