China Resources Land says top cities may take steps to steady housing market

China Resources Land says top cities may take steps to steady housing market
23/03/2016 , by , in INTERNATIONAL

State-backed property developer China Resources Land Ltd said local governments in the country’s top-tier cities may introduce partial short-term tightening measures to tame an overheating housing market. China’s home prices rose at their fastest clip in almost two years in February given red-hot demand in big cities, but risks of overheating in some places combined with weak growth in smaller cities threaten to put more stress on an already slowing economy, according to Reuters report.

“Prices in Shenzhen and Shanghai are rising faster than expected … the government wants the market to stabilise, reflecting its intention to prevent a bubble from forming,” said Tang Yong, the chairman of China Resources Land, which reported a 19 percent jump in its core profit for last year.

The chairman expects home prices in Shenzhen to continue edging up but transaction volumes to ease as the government takes steps to tighten the market.

Earlier in the day, China Resources Land said its core profit, which excludes investment gains and losses, climbed to HK$14.2 billion ($1.8 billion) last year. This was, however, lower than an average Thomson Reuters Starmine SmartEstimate of HK$16.7 billion from 27 analysts.

Net profit for China’s eighth-largest property developer rose 15.8 percent to HK$17.5 billion during the period.

The company, which remains positive about the country’s property market due to supportive policies from Beijing, aims to achieve 96 billion yuan ($14.81 billion) sales this year, higher than the 85.2 billion yuan recorded in 2015.

The property sector will benefit from supportive policies including a moderate monetary environment, an acceleration in new-round urbanization, inventory clearance measures as well as the formal end to China’s one-child policy, China Resources Land said in a statement.

Shares of the developer closed down 2.4 percent, versus a 0.1 percent gain in the broader market. ($1 = 7.7541 Hong Kong dollars) ($1 = 6.4804 Chinese yuan renminbi).

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