December 27, 2018 / 3:50 PM / 6 months ago

Chinese city performs property prices U-turn after just one day

FILE PHOTO: Houses, which have been built atop a furniture shopping mall, are pictured in Hengyang, Hunan province, July 30, 2013. REUTERS/Stringer

HONG KONG (Reuters) - The central Chinese city of Hengyang on Thursday rescinded an order to lift curbs on property prices that it had introduced just a day earlier after the move sent shares in China’s real estate firms rallying.

It had decided to scrap the limits, starting from Jan. 1, because it said the market had stabilised. The CSI300 real estate index .CSI300REI rose as much as 2.4 percent.

However, the government of Hengyang, the second largest city in Hunan province after the capital Changsha, said in Thursday’s notice that “it misjudged the complexity of housing prices and the order has caused speculation and misunderstanding by the market”.

“Therefore, the city government has decided to cancel the order,” it said.

“The city government is determined to keep property market of Hengyang healthy and stable in order to protect the interest of the public,” it said in the notice.

China’s real estate market, dominated by build-to-sell properties, has boomed over the past two years, prompting authorities to tighten controls in more than 100 cities to clamp down on speculative buying.

Hengyang’s previous move to lift curbs on property prices came after another Chinese city removed curbs on property sales in a test of central government’s resolve as the world’s second largest economy loses momentum.

Reporting by Meg Shen; Editing by Alison Williams

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