China should include housing price stabilisation in its primary monetary policy goals, according to a top government official, a day after the central bank has increased interest rates for the fourth time since October 2010.
Since property acquisition is a significant part of consumer spending, the central government should target home prices along with the consumer price index, said Yin Zhongli, a researcher from the Chinese Academy of Social Sciences.
For 2011, Beijing has set its annual inflation target at four percent.
Home prices have stubbornly remained at record highs, despite a slew of cooling measures, which fuelled concern that a bubble may be developing.
The sizzling property market has brought inflation to a 28-month high, stoking government worries that increasing prices might lead to social disorder, as it has in the past.
The government has attempted to cool property prices through market curbs even as it tightens policy through traditional channels, but Mr. Yin said the authorities should take a step further.
Beijing should include the task of maintaining home prices in its official policy goals, along with creating jobs, promoting economic growth and keeping currency and price stability.
“A healthy property market is crucial in laying the ground for a stable financial system,” Mr. Yin added.
The People’s Bank of China has raised the benchmark lending rate by 25 basis points, rousing suspicion that inflation may have increased faster than expected in March.
A slew of measures have decelerated the rate of increases in housing prices but prices continue to surge on the back of growing affluence and tight supply.