Attempts by Chinese city governments to introduce property market boosts will be stamped out as the country's central authorities are determined to maintain curbs on housing.
Some cities, such as Shanghai, have been relaxing the rules regarding owning second homes since China's property market began slowing as a result of strict regimes introduced last year on the number of properties that can be owned and on mortgages.
China's local governments have attempted to ease property tightening policies while Premier Wen Jiabao has maintained that he won't waver on real estate controls and efforts to bring prices down to a reasonable level.
'The central government will not relax its property tightening this year,' said Jeffrey Gao, a Shanghai based analyst at Macquarie Capital Securities.
'They may turn a blind eye to mild moves to ease the curbs in individual cities, but the official wording of their policies won't change because home prices could easily rebound,' he added.
But others think that any attempts to ease the property restrictions will be heavily stamped on. Indeed, the local government in Shanghai restated home purchase restrictions on local permanent residents buying second homes just a week after it had relaxed them.
The eastern Chinese city of Wuhu has also reversed its decision last month to relax property curbs including waiving a deed tax and subsidizing some purchases.
The southern city of Zhongshan, the hometown of Sun Yat sen, the founder of modern China, increased a price cap on residential home sales in January, and the western city of Chongqing last month also raised the minimum threshold where a property holding tax kicks in.
China's two year efforts to control the property market have included measures from raising down payment and mortgage rate requirements, imposing property taxes for the first time in Shanghai and Chongqing, and home purchase restrictions in about 40 cities.
However, the result has been shrinking local government revenue. Land sales in Wuhu, a midsized industrial city in the east and home to China's sixth largest car maker, fell 51% last year. In the north eastern industrial city of Dalian they fell 60%, according to SouFun, the nation's biggest real estate website.
Land sales make up 30% of local government revenue and in some cities account for more than half, according to a report by Zurich based UBS.
RESOURCE Propertywire
