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Chinese government wants a stable property market

More pro-active and effective policies will be forthcoming to underpin market confidence and real estate investment but it will aimed more at the domestic market, according to a report from Colliers International.

The government is expected to speed up the implementation of welfare housing and public rental housing. Related mortgage and tax policies to encourage home purchase for own use and purchase of second home, particularly for those in the ordinary housing segment, are also expected.

Premier Wen Jia-bao told the recent National People's Congress that central government's policy is to support the property market in terms of boosting domestic demand and maintaining social stability. However, the real estate sector is not included in the top ten industries under the central government's policy support programme.

The Colliers reports says that central government will continue to leave it to local governments to fine tune property policy measures to customise to the specific needs of provinces and cities.

Given that the central government's policy intent is to maintain a stable property market, analysts don't expect the central government to roll out more aggressive policy measures, such as income tax rebates, unless there is unexpected deterioration in market condition.

'The absence of new policy measures suggests that market forces would play a more essential role in the property market adjustments, particularly in the high-end segment of the residential market,' the report says.

'Having said that, more measures are available if necessary to brace the market against unfavourable circumstances. The Premier's undertakings should provide a safety net and inject confidence to the property market, conducive to its current round of adjustment,' it adds.