Wang Shi, founder and chairman of Vanke, China's biggest real-estate developer, said Wednesday at a shareholders meeting that surging home prices do more harm than good to China’s property market and national economy.
The central government has recently vowed to implement a 20% capital-gains tax on sales of second homes, further home-purchase restrictions and stricter credit regulations for second-home buyers to cool the market.
Speaking of the new tightening policy, the tycoon said he is fully aware that it is put in place to curb property speculation and Vanke will make some adjustments when details of the new ruling are unveiled.
Analysts also believe the latest property measures were more targeted at the secondary market, and have a limited impact on new homes.
"Administrative and financial regulation has been effective in the past two years, but it is difficult to continue such measures for long," Wang predicted.
He said that Vanke will not follow the footsteps of other developers to raise prices.
"Given the current market conditions and monetary supplies, a price increase is also reasonable," Wang added.
But he warned that if the prices rise too quickly and result in a housing bubble, it would be devastating to the sector and the economy, because the real estate industry is also a crucial driver of the domestic economy.