China’S Cities Drag Feet On Home-Price Curbs: Mortgages

[interestrateripoff]

http://www.bloomberg.com/news/2013-04-15/china-s-cities-drag-feet-on-home-price-curbs-mortgages.html

All real estate markets are local, says the industry axiom, one that China’s central government is painfully aware of as its efforts to rein in home prices are undermined by uncooperative municipal authorities.

Former Premier Wen Jiabao, in his final endeavor to make housing affordable, set an April 1 deadline for higher down payments and interest rates for second-home loans in cities with “excessively fast” price gains and ordered stricter enforcement of taxes on sales. Thirty-five provincial-level cities responded with measures insufficient to curb prices that climbed 150 percent from 2003 to 2012.

“The local governments are just making a gesture to show they are following the orders,” said Ding Shuang, a senior China economist with Citigroup Inc. in Hong Kong. “Some of the targets are almost like jokes. The government’s enforcement of policies will be compromised.”

Local officials lack the resolve to cool the market because proceeds from land sales contribute about a quarter of their fiscal income and are needed to fund infrastructure and other spending. Their reluctance to act decisively poses a challenge to Premier Li Keqiang, who replaced Wen on March 15 and inherited rising prices that aggravate social unrest by putting homes out of the reach of many Chinese.

After a brief slowdown in the first half last year, sales jumped 53 percent in March from a year ago, government data released yesterday show. Prices for new homes climbed the most in more than two years from February, according to SouFun Holdings Ltd. (SFUN), owner of the country’s biggest real estate website.

Why are local officials going to turn off the golden goose of property money? It would appear China is suffering from the obsession of property like the UK, unfortunately as we all know China is magic like the UK and doesn't have our fundamentals.

China will go pop, it's a bubble economy and a deep recession is inevitable.

[goldbug9999]

At least they have a leader who recognises that its a problem, that makes them pretty much unique in the G20.

[zugzwang]

It's not just China. All the BRICs are being crushed to death by QE. Nor has it done the US any favours. Capital that might otherwise have been employed productively has been used to speculate on stocks, gold and houses while the real economy languishes.

So as the world slides into the abyss once again, what will they do next? More of the same? Is it now simply a race to see who blows up first?

[OnlyMe]

Local officials lack the resolve to cool the market because proceeds from land sales contribute about a quarter of their fiscal income and are needed to fund infrastructure and other spending.

Sounds like the official answer, you can bet your bottom dollar that most are knuckle deep financially in the bubble and have very personal reasons for not wanting to rock the boat.

[interestrateripoff]

are you even reading tea leaves?

If I have tea it's in a bag.

Coffee doesn't have the same effect.

[interestrateripoff]

Local officials lack the resolve to cool the market because proceeds from land sales contribute about a quarter of their fiscal income and are needed to fund infrastructure and other spending.

Sounds like the official answer, you can bet your bottom dollar that most are knuckle deep financially in the bubble and have very personal reasons for not wanting to rock the boat.

It would be interesting to see what financial interests the local politicians have and to look at their property wealth.

[fluffy666]

It would be interesting to see what financial interests the local politicians have and to look at their property wealth.

Interesting is a relative term. It may be interesting to have a local politicians' henchmen pulling your fingernails out with pliers whilst delivering a homily on the subject of Not Poking Your Nose In, but I'm not sure it would have the desired effect..

[Executive Sadman]

150% in ten years sounds a lot, but isnt china a high growth high inflation economy where wages rise about 10% a year and you can still get 10% in a savings account? A bit like high prices rose in the 70s here but fell in real terms.