MNI: China's Property Market Defies Doom Predictions

--Chinese Cities May Look To Loosen Housing Curbs

--Property Sector May See Stronger-Than-Expected 2018 Growth

     BEIJING (MNI) - Barely a week into the new year, signs are emerging that

the desire of China's local authorities to gain revenues from home sales is

overriding their commitment to toeing the official line of slowing speculative

property investment, Market News analysis suggests.

     Lanzhou city, located in the northwest Gansu province, removed individual

home purchase quotas for some suburban districts last week. Some investors

expect more cities will follow Lanzhou's lead, helping to reheat the property

market.

     Since late 2016, Chinese authorities have rolled out a multitude of

measures, such as increasing mortgage rates, implementing home purchase quotas

for each individual and family, and even limiting the maximum list price for

property projects.

     The last 12 months saw many regional Chinese authorities show their

determination to contain price gains and curb property market bubbles by issuing

frequent new policies, adhering to President Xi Jinping's slogan "houses are for

living, not for speculating on".  

     That in turn led economists to project slowing property investment this

year, hence slower economic growth.

     --CITIES EASE CURBS

     A growing number of Chinese cities are now tweaking their curbs on the

property market, running at odds with the central government's intent to rein in

what some see as bubbles that can lead to a wider-scale financial crisis.

     Nanjing City, capital of eastern Jiangsu province, issued a new policy

document last week, offering subsidies for home purchase as high as a minimum of

CNY3 million for an individual. 

     Observers said these measures are disguised to loosen controls and help

revive flagging local economic growth.

     It therefore follows that China's property market may defy glum predictions

and post better-than-expected growth this year. If so, a better-than-expected

performance of the property sector could underpin strong economic growth.

     --STRONGER GROWTH

     That outlook is shared by some of the top property analysts in China

interviewed by MNI. 

     Yan Yuejin, director of E-house R&D Institute, said more cities could

loosen policies on suburban area properties if they are under increasing fiscal

pressure, as property or land sales comprise a large portion of government

revenue.

     "They have imposed too strict curbs, especially in suburban areas," which

choked the market, so they are forced to backtrack, Yan said.

     China International Capital Corporation, a state-backed investment bank,

said earlier this week it projects growth of the property market this year will

be stronger than it expected. The sector could help boost China's gross domestic

growth to 7%, up from the 6.9% prediction which the bank was made at the end of

last year.

     Investment growth and housing starts are expected to accelerate on

historically-low inventory volume and fast hike of land transactions last year,

CICC said.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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