China faces policy dilemma as home prices jump in GDP boost

http://www.cnbc.com/2016/09/19/china-faces-policy-dilemma-as-home-prices-jump-in-gdp-boost.html


Policymakers in China were facing the dilemma of driving growth while preventing the property market from overheating, an economist said Monday as prices in the world's second largest economy jumped in August.

Earlier, the Chinese government introduced measures aimed at boosting home sales to reduce large inventories in an effort to limit an economic slowdown. While the moves have boosted prices in top-tier cities with some spillover in lower-tier cities, there were still concerns of uneven bubbles in the market.

As we know, China is on the way to have negative interest rate, which lead to Chinese residents became more passionately to purchase house property as investment. House property has been playing the most important role in economic growth over decades, the overall value of house property is near 200% of national GDP. And this is one of the reasons why Chinese government is way too conservative to suppress the house market.

In addition, in my opinion, one way to restrict the house bubbles is for government to publish and carry out property tax or housing restriction policy.