Tightening measures likely to slow China's property market

A slowdown in China’s residential market appears to be in the cards with further reports of commercial lenders tightening up on mortgage loans. Pressure from the People’s Bank of China, the central bank, as well as the banking regulator, appears to have resulted in several leading state-controlled banks ordering branches to stop issuing new loans altogether until next month.

Mainland lenders issued almost US$205 billion in individual mortgage loans in 2009, just over 37 percentage points higher than the amount granted the previous year. Fearing that the housing market will soon bubble over, Beijing has already initiated a number of counter measures to ease some of the pressure. These include reinstating the business tax exemption period for pre-owned home sales to five years from two. Mortgages are next in line.