No property bubble in sight: planning official

An official with China's top planning agency says it is too early to say if the property market is in a bubble.

"The property market is still doing fine despite some regional problems," said Li Tie, director of the China Center for Urban Development under the National Development and Reform Commission.

He was speaking on the sidelines of the World Economic Forum "Summer Davos" in Dalian, Liaoning province.

China is still some distance away from a property bubble, Li assured an audience at a breakfast meeting on Thursday. 

Li said some administrative regulations should be revoked. 

Some regulations have made it more difficult to get home loans, and failed to curb price rises, according to media reports. "The government can curb property speculation by using market forces just as well," he said.

He was speaking after Wang Jianlin, chairman of Dalian Wanda Group, a major commercial property developer, was quoted by media as saying the authorities might reconsider their policy stance on the property market. Wang is the newly crowned richest person in China, according to the Hurun Rich List 2013, released on Wednesday.

The Ministry of Housing and Urban-Rural Development recently sent a supervisory group to investigate how the government's housing price controls have been implemented, 21st Century Business Herald reported. 

Qin Hong, deputy director of the ministry's policy research center, reiterated at a recent conference that the government needs to maintain curbs on the property market in the short term.

However, she admitted that 80 percent of homebuyers are either first-time purchasers or those who want to improve their living conditions rather than buy for investment. 

In the meantime, banks are reported to have canceled the discount loan rate to homebuyers.

The National Bureau of Statistics says housing prices in 70 major cities rose by 7.5 percent on average in July from the same period in 2012. All cities but Wenzhou reported house price rises.

Rebounding property prices are encouraging developers to invest heavily, resulting in record bidding for prime land in first-tier cities, including Beijing and Shanghai, in the first week of September. 

Zhang Dawei, research director at real estate brokerage Centaline Group, estimates that housing prices will increase by 50 percent in a year based on the value of these parcels of land. 

"Based on current levels, these major cities will face huge pressure to realize their goal of curbing house prices this year, even if prices stop increasing right now." 

Li Tie said China's property market will be driven by urbanization.

Addressing guests at the Dalian forum on Wednesday, Premier Li Keqiang said China's industrialization and urbanization is still at the inception stage, with huge potential in the consumer market. 

Li Tie said that to promote healthy development of the market, the authorities should consider providing more quality public services in cities other than Beijing and Shanghai to ease the pressure on property prices in those cities. 

Kenneth DeWoskin, director of the China Research and Insight Center at DTT, said high property prices in China are not driven by demand, but by the way the system is designed.

"It is the combination of local governments, companies and banks taking advantage of the higher prices that contributes to skyrocketing prices," he said.