Photo: Elmastudio on flickr
The Chinese government is reportedly stepping up efforts to contain growth in home prices in smaller cities. Beijing told local governments to tighten their property markets on Thursday.The move comes after developers posted a 31% increase in June housing transactions, and reported huge gains in sales in the first half of 2011, according to Bloomberg.
Housing transactions increased to 499.2 billion yuan in June, compared with 380.9 billion in May. Sales soared 22% to 2.1 trillion yuan in the first half of 2011.
The move comes after the government already restricted home sales in Beijing and Shanghai.
Societe Generale analyst Yao Wei told Bloomberg:
“If the government doesn’t step up to say anything at the half-year point, the market will interpret it as the government is tolerant to gains in the housing market… China is facing a big pressure from inflation and there’s no way the government will relax property curbs now.”
We had previously written about how government tightening measures to prevent a property bubble in bigger cities had seen hot money drive up home prices in second and third-tier cities. Now the government wants to curb the number of homes each family can own in these lower-tier cities.
Developers like China Vanke Co., Poly Real Estate Group Co, Chinese Overseas Land and Chinese Resources Land Ltd. saw major most sell-off on the news. Meanwhile, the government is focused on boosting affordable housing across the country, hoping to create 10 million units by the end of November.
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