Economy

Impact of property policies on China's economy

(China Daily)
Updated: 2010-07-22 10:24

 

Ha Jiming, chief economist at China International Capital Corp

Real estate prices in some cities are high, but prices are reasonable in some second- and third-tier cities. The monthly mortgage to household income ratio in these cities is healthy. China's urbanization will create opportunities for the property industry in the future, particularly in China's central and western areas.

The stringent policies placed on the property sector will continue in the short term. The government may relax the policies if property prices continue to ease.

To what extent will the price decline be appropriate? A reasonable level would be one that can both make the public happy and keep the country's financial system from being unduly affected. Banks generally think a 30 percent decline is acceptable, but that's the bottom-line for banks, and would not be acceptable if we take market confidence and the sector's potential impact on the overall economy into consideration.