March 16, 2017 / 8:31 AM / 5 months ago

China pledges to contain home prices as property market defies curbs

Cars drive past residential buildings along a street in Hefei, Anhui province, China, February 19, 2017.Yawen Chen/Files

BEIJING (Reuters) - China added a pledge to contain the country's fast-rising home prices to its annual work report on Thursday, as a red-hot property market resists cooling measures and purchase restrictions spread out from the biggest cities.

Several lower-tier cities have raised the bar for home purchases this month as speculators from outside flood smaller markets, with home prices nationwide continuing to rise.

The final version of the government work report said "containing excessive home price rises in hot markets" will be a key focus this year, according to a final version of the report released Thursday by official state media Xinhua.

The first version of the work report, delivered by Premier Li Keqiang on March 5, did not include the phrase.

Home sales surged in the first two months of the year despite government measures, though growth in real estate investment showed signs of easing, according to data released on Tuesday.

Residential buildings are seen along a street in Hefei, Anhui province, China, February 19, 2017.Yawen Chen/Files

Lending to households, mostly mortgages, expanded rapidly last year, accounting for 50 percent of all new loans, and remained high in January.

People's Bank of China (PBOC) Governor Zhou Xiaochuan said last week that measures to cool rising house prices would slow mortgage growth to some degree, though housing loans would continue to grow at a relatively rapid pace.

Several major banks in Beijing have temporarily stopped issuing housing loans since February, financial magazine Caixin said on Thursday citing bank and property agent sources, though the halt was due to a lack of loan quota, with approval timelines extended but loans still being granted.

China's state-run banks typically rush to issue loans early in the year to lock-in clients before quotas for lending are exhausted.

The banking regulator and the PBOC have told banks to curtail new mortgage lending, state-owned newspaper Economic Information Daily reported on Monday, citing unnamed banking sources.

Caixin cited regulator sources saying that the PBOC was monitoring lending in real time and guiding banks to not allow personal loans to increase too much.

Reporting by Elias Glenn; Editing by Jacqueline Wong

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