Editorials

Pricking the bubble

(China Daily)
Updated: 2010-04-19 08:04

Editor's note: The authorities have recognized the danger of a looming property bubble and the huge cost of not pricking it in time. But more efforts are needed to ensure the sector's healthy development.

The second blow that the central government dealt to the red-hot property market has come much sooner than expected. Just two days after it decided to lift down payments and second-home loan rates, the State Council announced on Saturday that commercial banks can refuse to issue loans to third-home buyers in cities where housing prices are rising too quickly.

Such continuous, heavy moves are meant to drive home the message that the government is very serious about reining in runaway property price hikes.

After several rounds of tightening measures failed to cool the property market in recent years, housing prices in many major cities have not only reached record highs but also accelerated their surge. Last month, property prices in 70 major cities rose 11.7 percent from a year earlier, the highest since records began in 2005.

The worst global economic crisis in decades that broke out in late 2008 has understandably prompted Chinese policymakers to take a much more accommodating stance toward real estate investment, a major contributor to economic growth.

The Chinese economy has rebounded so strongly out of the global recession that it registered an 11.9-percent gross domestic product growth in the first quarter, the fastest expansion in nearly three years. It is high time for policymakers to carefully weigh the risks of property bubbles against the growth momentum that a dynamic property market provides for the national economy.

The latest efforts to cool the property market shows the authorities have fully recognized both the danger of a looming property bubble and, more importantly, the huge cost of not pricking it in time. But more efforts are needed to keep various speculators at bay, to ensure the sector's healthy development.