Posted on 04/24/2008 8:31:44 AM PDT by RightWhale
Shanghai (AFP) April 23, 2008
China's top economic planning agency has warned that a range of economic factors were likely to push up domestic property prices in the second quarter. The National Development and Reform Commission said in a quarterly report on China's real estate sector released on Tuesday that upward pressure on housing prices was mounting again after a slight slowdown in the first three months.
"Excessive liquidity and the appreciating yuan are driving asset prices including houses higher, while soaring costs of steel and labor are also pushing prices forward, especially in small and medium-sized cities," the report said. "Meanwhile, huge amounts of funding has fled equity markets after recent slumps... investors are likely to reinvest the money in property instead of bank deposits." The report stressed that the government must keep housing market prices stable, partly through increasing the amount of land available for residential development.
Since 2005, China has taken a number of measures, including interest rate hikes and imposing taxes, to curb rapidly rising real estate prices amid concerns of a dangerous bubble in the sector. In the wake of those measures, soaring home prices did cool to a certain extent. Official data said earlier that property prices in 70 major cities across the country rose 10.7 percent year-on-year in March, down 0.2 percent from February. China has been struggling to rein in galloping inflation, which saw consumer prices soar 8.0 percent for the first quarter of the year, near a 12-year high.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.