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China orders low-cost housing against property bubble

China orders low-cost housing against property bubble, CHINA, january 2010

Raining hot prices in real estate market

China's city governments and ministries have been told to build more low cost housing. They have also been ordered to push property developers to complete projects more quickly in order to help ease property prices.
The directive has come from the country's cabinet, the State Council, amid fears of a property bubble. It also says it wants to prevent speculative foreign investment pushing up prices even further.
China's leaders are worried that house prices in many cities here are rising too fast now.

Hot money

If too many Chinese are priced out of the market, it could stir economic and social instability.
Last year China's banks issued $1.5 trillion (£932 bn) worth of new loans to help ease the country through the financial crisis.

It is thought around a sixth of the total flowed into the property sector and there are some here who worry it is now overheating.

The new directive from the State Council sets out measures to try to increase the supply of smaller, cheaper homes for families on low incomes.

It also urges financial institutions to promote measures that encourage first time buyers but discourage those who want to purchase a second home for investment purposes.

It says there should be a crackdown on property developers who hoard land to try raise prices in an area.

And it wants to stop so called "hot money" from flowing into the country.

This is cash from foreign investors who see the rising prices here as an opportunity to make money.

BBC News, Shanghai