China's First-Time Home Buyers Catch a Break

By ESTHER FUNG

SHANGHAI?China's banking regulator has pledged credit support for the construction of small- and medium-sized homes and loans for first-time home buyers, in another sign of selective government help for the ailing real estate market.

The China Banking Regulatory Commission said the nation's banks will also support lending for social housing projects, especially those that are undertaken by provincial governments, said the chief regulator, Shang Fulin.

In a statement posted on the CBRC's website Friday, Mr. Shang said that in the second half of the year, the regulator will focus on getting banks to lend in support of "projects that build rental homes and overhaul slum areas," terms the government uses to refer to housing for low-income families.

The CBRC insisted, however, that it would "resolutely carry out the country's property tightening policies" and control lending to weaker developers.

Property developers have benefited from two cuts in interest rates since June, which have lowered home-buyers' borrowing costs.

Developers are also expecting Beijing to introduce more favorable lending policies, though central government officials reiterated that it will only allow banks to support first-time home buyers, not speculators.

Beijing has been more supportive of first-time home buyers since the start of the year amid efforts to lower prices to reasonable levels and curb speculation while supporting genuine demand for housing.

"Previously, speculators dominated the market but the government has stepped up efforts to change that. China's leaders have insisted that banks support genuine buyers and housing projects for them," said Joe Zhou, head of research for Jones Lang Lasalle in Shanghai.

"Such selective easing will ensure that prices don't rise too much," he said.

Mr. Shang's comments come after the State Council, China's cabinet, said last week that it is sending eight teams to various cities and provinces to review the implementation of property curbs by local governments.

There have been growing concerns among investors about the possibility of further tightening measures as China's property market has shown signs of a turnaround in recent months. Home sales among first-time home buyers and upgraders, people buying a subsequent home, have picked up following more accommodative monetary policy and local easing of property curbs, and prices have rebounded in some cities.

"I've shelved my plans to buy a bigger home for now. Mortgage costs have fallen, but home prices are inching up again," said Lin Shufan, a Shanghai-based banker.

Central government officials have repeatedly said that property tightening measures must be kept in place, but have allowed some local governments to implement accommodative measures that support genuine home ownership and don't directly contravene their stance on curbing housing speculation.

State-run China Securities Journal ran a front page commentary Monday saying that China has to expand property tax trials to more cities to curb speculation and reduce local governments' reliance on land sales for revenue.

Trials in Shanghai and Chongqing should be expanded to cities such as Beijing and Guangzhou, it said, adding that the tax should gradually replace restrictions on home purchases as long-term measures to curb housing speculation.

?Yue Li contributed to this article.

Write to Esther Fung at esther.fung@dowjones.com

Source: http://online.wsj.com/article/SB10000872396390444226904577558190339595630.html?mod=rss_asia_whats_news

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