CHINA'S eastern city of Wuhu suspended a decision to ease property curbs three days after its announcement, in a move that underscores the Central Government's determination to cool prices.

    The mid-sized city in Anhui Province will temporarily suspend its home subsidy policy so it can study details on how to implement the rules, according to a statement on the local authority's Web site late Sunday. Wuhu will waive a deed tax and subsidize some purchases of small apartments, it said Feb. 9, becoming the first Chinese city this year to signal its intention to ease property curbs.

    China won't waver on its real estate controls, which aim to bring home prices down to a reasonable level, to ensure fairness and stability, Premier Wen Jiabao said during a meeting with business executives last week, Xinhua News Agency reported Sunday. Wuhu followed in the footsteps of the southern Chinese cities of Foshan and Zhongshan, which tried to loosen measures targeting the once-hot real estate market. Foshan in October shelved plans to ease limits on home purchases one day after its announcement, while Zhongshan has eased its home price limit after sales volumes and price rises have come off the boil.

    "We at Credit Suisse recommend selling China property sector now," Jinsong Du, the bank's Hong Kong-based analyst, wrote in an e-mailed note. "The Wuhu reversal clearly shows that the stock market has severely underestimated the Central Government's political will to cool the housing market significantly further."

    China intensified measures last year with home purchase restrictions in 40 cities and higher mortgage requirements. Home prices fell 0.18 percent in January from December, a fifth consecutive monthly decline and the longest streak of drops since SouFun Holdings Ltd., China's biggest real estate Web site, began tracking prices.

    An index tracking Shanghai-listed real estate companies surged 4 percent since Feb. 9, extending this year's rally to 9 percent, amid speculation that other regions may follow Wuhu by relaxing restrictions.

    China Vanke Co., the nation's biggest listed developer, said early this month that January sales fell 39 percent from a year earlier.

    Wuhu will give subsidies of 50 yuan (US$7.90) a square meter for the purchase of homes of 70 square meters to 90 square meters, and 150 yuan a square meter for new homes smaller than 70 square meters, the local government said in the Feb. 9 statement.

    The measures in Wuhu were intended to meet demand from buyers with low incomes and to attract residents with higher education rather than to bail out the property market, Hong Jianping, Wuhu's vice mayor said at a media briefing. Under the policies, the subsidies would apply to purchases of first homes. Homebuyers with more extensive educational backgrounds or professional qualifications would be entitled to higher subsidies, the Wuhu government said.

    "The retraction was probably done after pressure," Jeffrey Gao, a Shanghai-based property analyst at Macquarie Group Ltd., said by phone late Sunday. "Their policies went too far and were surprising."(SD-Agencies)