(Yicai Global) April 25 -- Real estate regulation should help curb the housing bubble and prevent wild market fluctuations, Beijing Business Daily quoted Sheng Songcheng, counselor and former head of the central's investigation and statistics department, as saying yesterday.
Regulating the property market is complex, Sheng said, as it involves stabilizing property prices while striking a balance between development of the real estate industry and economic growth. In other words, the market's contribution to economic growth should be maintained at a reasonable level, he added. China needs to adopt effective measures to stimulate growth in the real economy to support growth in property sales and gradually deflate the housing bubble.
Real estate contributed 7.1 percent to nationwide economic growth in the first quarter, down 0.1 from the same period last year. In contrast, Sheng said, the figure was around 12 percent in the US, 11 percent in Germany and 13 percent in the UK, indicating China's housing market still has plenty of room to grow. Real estate investment remained strong, growing 9.1 percent to hit a three-year high.
Property issues are systemic in nature, a market insider said, adding that Sheng's remarks suggest the People's Bank of China is wary of imposing restrictions on property purchases and mortgages, but has to react to excessive increases in prices. It could be a signal that the central bank will take a neutral stance on the matter.