MNI EXCLUSIVE: China May Ease Property Regulations: Advisors

By Wanxia Lin

     BEIJING (MNI) - China may marginally relax its tough property-market

regulations as economic growth falls close to 6% next year, but major moves are

unlikely as authorities express determination not to resort to stimulating the

speculation-prone sector, government advisors told MNI.

     "Regulations will maintain the current tight bias, as the trend for large

amounts of capital to flow into the real estate sector has not changed," said

Liu Xiahui, head of the economic growth office at the Institute of Economic of

Chinese Academy of Social Sciences, but he added that "any tougher regulation on

home purchase limits, or developers' financing is unlikely."

     The central bank reiterated in its Q3 monetary policy report on Saturday a

call "not to use the real estate sector to stimulate short-term growth",

touching off investor concerns that it could crack down further on the sector.

     But Su Jian, director of the National Center for Economic Research at

Peking University said further tightening of regulations was unlikely, and that

they could be slightly eased if infrastructure investment fails to prop up the

growth at around 6.1% next year. Measures could include the relaxation of

purchase limits in small cities, and moves to make financing easier to obtain.

     --SLOWER GROWTH

     Property investment growth has decelerated for six consecutive months,

falling to 10.3% y/y in Jan-Oct. Data this year has shown slowdowns in lending

to developers, land purchases, new projects and home sales.

     First-tier cities are unlikely to see their purchase limits loosened, Liu

said. The government would rather concentrate on boosting infrastructure

investment, and is very likely to bring forward issuance of some of 2020's quota

of infrastructure-backed special purpose bonds to December. Infrastructure

investment growth was a relatively low 4.2% from January to October.

     With China's population falling since 2018, Su believes the sector is

heading into a turning point.

     But Liu said it would still take about 20 years to raise China's

urbanisation rate to around 70%, and cities in Southeast China continue to

expand, so property investment and housing prices will not stall in the near

future.

     Wednesday's 5-bps cut in the five-year Loan Prime Rate, which guides

lending rates to companies, will help to lower the cost of medium- and long-term

loans such as personal mortgages, Su said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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

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