Chinese property prices just fell for the first time since February 2009, with a price index of 70 cities dropping 0.1% in June vs. May, but the government’s property tightening is far from over.
That was the message delivered today by China’s Ministry of Housing And Urban-Rural Development and markets clearly weren’t happy, with Shanghai’s CSI 300 dropping 1.6%.
Hasn’t the government been heavy-handed enough? Might they actually be serious when they say they want to clamp down on speculation?
They might be.
Deputy research head of the housing ministry Qin Hong confirmed that while tightening efforts from April are deflating prices, tightening would continue.
“Generally speaking, this round of tightening measures has met targets, as evidenced by falling property sales, stabilised prices and people’s expectations of price trends,” he said. “We will urge local governments to make sure that they strictly implement the differentiated housing loans policy to crack down on housing speculations,” his ministry said on its website.
Note that in April the government had increased required down payments and banned certain types of transactions, yet today the government has reiterated its intention to continue pushing for increased land supply, property taxes, and curbs against property speculation.
Perhaps some were hoping that the government wouldn’t sound so adamant, fearing they could take things too far.
Don’t they realise how many industries around the world, and markets, are related to China’s property boom? U.S. futures surely got the picture, as they’re currently in the red (S&P500 down 0.3%), and fell on this China news despite rallying ahead of it.
Just because Chinese property tightening may be necessary doesn’t mean it won’t hurt a lot of markets.