China's Property Price to Remain Stable in 2011

China's property prices may edge down in 2011 as authorities press ahead with more measures to flush speculators out of the property market.

That's according to a green paper report on China's property market compiled by the Chinese Academy of Social Sciences.

CRI Zheng Chenguang takes a closer look.
To buy or not to buy? That seems to be a perpetual question nagging all first-time home buyers facing sky-high housing prices in China.

The recent green paper report from China's top think tank might offer some reassurance - it argues that China's property prices will stabilize and even drop moderately next year.

Yang Hongxu, a senior researcher at E-House China R&D Institute in Shanghai, offers his observations.

"The current stringent measures to reign in the property market will remain in place. So long as next year's economy doesn't fare as bad as in 2008, the authorities will have more leverage to control the property market. China's shift in monetary policy from being moderately easy to prudent will further limit loans to developers and mortgage borrowers next year."

Yang Hongxu says an upcoming property tax designed to stifle speculation will add another arrow to China's property-tightening quiver.

A recent report in the China Securities Journal said China will launch a trial property tax early next year. Shanghai and Chongqing would be among cities to start the trial before it expands nationwide.

Yi Xianrong is with the Chinese Academy of Social Sciences. He says combined with the existing measures, the one-two punch will kill the mood for speculators.

"The existing policies raised the threshold on down payments, but failed to target well-heeled speculators or people who had already profiteered from speculation. A property tax will do the trick."

China launched a fresh round of measures to tighten the property market since April this year. Both experts say these measures proved to be ineffective largely due to watered-down implementation at the local level. To effect real changes, authorities must also ensure they are properly executed at all levels.

For CRI, I'm Zheng Chenguang.