Premier Wen Jiabao: China’s “housing prices will drop to a reasonable level”

According to the China Daily, China’s Central Government plans to strengthen policy in 2011 designed to cool the property bubble in China. The announcement came a day after China’s Central bank increased the one year benchmark lending rate by 25 basis points to 5.81 percent in a further bid to curb spiraling home prices. The benchmark deposit rate increased to 2.75 percent. On December the 3rd, the central bank said it would adjust monetary policy in 2011 from relatively loose to prudent in a bid to tighten the supply of hot money fueling inflation.

China’s Premier Wen Jiabao acknowledged in an interactive radio broadcast on the 26th December current policies designed to cool the market has not achieved satisfactory results.

“I made a promise to the Chinese people last year that I would try to keep housing prices at a reasonable level during my tenure, and I won’t shrink from that goal,”

“I believe that, through our consistent efforts, housing prices will drop to a reasonable level.

According to Minister of Housing and Urban-Rural Development Jiang Weixin, the government plans to introduce more favorable policies to assist people who want to purchase a house to live in, while restricting the purchases of homes intended for investment and speculation. In April 2010 the government raised the minimum deposits for families purchasing second homes, and for first home buyers. It also restricted banks from offering mortgages for third homes in some of the larger cities such as Beijing & Shanghai. “These measures have helped contain speculative demand to some extent,” Jiang said, “And this year we will continue to limit mortgage loans for buyers of second and third homes in major cities.”

Many Chinese hold vacant property as a means of investment. Most have never seen house prices fall, and with deposit rates low, speculating on capital gains from housing provides better returns. In August 2010 there were reports that 64.5 million urban electricity meters recorded zero electricity consumption over a 6 month period, and predictions the 64.5 million vacant apartments could home over 200 million people. In survey results published in “Property Monthly” dated the February 10, 2010 by China Reality Research, nearly a fifth of all recently sold properties were kept vacant.

ยป Govt reveals new-year pledge on housing prices – The China Daily, 1st January 2011.


  1. Wen better get inflation under control first and let their yuan appreciate. But we know that is not going to happen until there is social unrest when food prices are through the roof. China has painted itself into a major corner.

  2. I would love the see the Australian Government curb property speculation here by phasing out income tax and replacing it with site rental charges on land. Over the same period, phase out negative gearing and increase capital gains tax.

    We also have many empty properties in spite of the property lobby raving on about a “shortage”. These empty properties are often held vacant by owners in the hope of windfall profits from sales. The market value of land is produced mostly by the community in the form of infrastructure and public services, yet the landlord’s selling profits go into his/her pocket, with little tax being paid.

    A few do very well out of this scam, while the many pay for it in the form of increased taxes and less, or more expensive, services. And, of course, the price of land continues to go up and up and up, helped along by our government in the form of first homeowner’s grants and similar bribes for the gullible public to get into debt.

    Bring on the great Oz property bubble bursting!

  3. Hello Hello…. Australian….. get off the real-estate bandwagon!!!!!!

    This almost drug like obsession with housing is pathetic…..

    US property spruikers are cashing in on “dumb aussies” who have spent $600 million so far on US housing.

    Meanwhile back at idiot HQ here in Melbourne there is a push to force some housing to be sold at lower cost…

    Why the hell not just let the markets correct and fix this issue, you can’t make something cheap when you’re also trying to keep it expensive. Like how stupid are Australians?

  4. @Admin,

    I know that good quality info isn’t as prolific as mainstream media junk and alternative junk too, I must second Robert’s statement.

    The people want more! Just don’t compromise your quality.

  5. Many countries have lower requirements for certain borrowers, or “no-doc” / “low-doc” lending standards that may be acceptable in certain circumstances.

  6. How is the housing disaster, and free fall in home values, gonna be fixed if folks can not obtain a new job? There are a large number of families which already lost their homes to foreclosure and many more will unless the USA starts generating something more then debt. It is time to change the trade deals with the Chinese. For crying out loud, our primary trade partner is known to manipulate its currency!

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