Over half of Chinese households believe housing prices too high

Over half of Chinese households think housing prices are too high and more than a quarter worry these will rise more, a central bank survey showed, adding to views authorities may have to take more property cooling measures even at the risk of dampening economic growth.

The survey by the People’s Bank of China, published yesterday, found 52.2 percent of urban households believed housing prices were “unacceptably high” in the first quarter.

That was a slight decline from the previous quarter but higher than in the first three months of 2016.

Also yesterday, a PBOC official said the central bank has advised banks in its annual guidance, which is usually not published publicly, to appropriately adjust mortgage lending policies in 2017 to match local housing conditions.

The official said banks must strictly abide by city-based credit policies and strengthen supervision over source of funds for property down payments.

In the guidance, PBOC asked banks to adjust measures such as their down payment ratios, discounts to mortgage interest rates, and the maximum period allowed to pay back mortgages, the official said.

China’s red-hot property market picked up pace in February after price gains had slowed in the previous four months, in spite of a raft of new government curbs aimed at tempering speculative demand.

The PBOC survey showed 27.2 percent of households expect housing prices to rise in the second quarter. Despite steep prices, 22.9 percent of households plan to buy properties in the next three months, 2.8 percentage points more than in the January-March period.

Two separate PBOC surveys, also released yesterday, showed banks and businesses became significantly more optimistic in the first quarter as China’s economy showed signs of improvement.