Chinese authorities have introduced 房屋貸款 restrictions inside a bid to ease concerns on the mounting housing bubble in China’s largest cities
On March 17, Beijing and three other major Chinese cities introduced a fresh round of lending curbs in an attempt to suppress the overheating property market in China’s largest cities.
From the first two months of 2017, the whole investment in actual estate development was RMB985.4bn ($142.9bn), up 8.9 percent year-on-year. For the similar period, sales of residential buildings were up 22.7 percent, based on official data.
Price hikes are particularly pronounced in large cities where land for brand new developments is starting to become increasingly scarce. As an example, the Tier 1 cities of Beijing, Shanghai, Shenzhen and Guangzhou, have witnessed markedly greater price rises than those of other regions. In fact, estimates suggest it might take several years to operate off existing housing inventories in certain of China’s smaller cities.
China’s new housing policies will be the latest in several other tightening measures employed country wide over recent months
Beijing’s new measures include steeper requirements on down payments for buyers of any second home, which can be up from 50 to 60 percent. In addition, many people will likely be classed as ‘buyers of the second home’, where previously individuals who had already paid back a mortgage loan might have been classed as novice buyers. Similar measures were used in the provincial cities of Guangzhou, Shijiagzhuang, Changsha and Zhengzhou. The latest policies are definitely the latest in a series of other tightening measures employed throughout the country over recent months.
Just four days after the new measures were announced, the OECD released its annual report around the Chinese economy, advising that authorities “urgently” address the overheating property market. The report stated: “Soaring property prices in Tier 1 cities and leveraged investment in asset markets magnify vulnerabilities and the risk of disorderly defaults.”
It further warned a collapse in housing prices would hurt several important sectors, including real-estate, construction, refurbishment and home appliances. This said, the report conceded the impact of such a housing industry collapse could be mitigated by stringent prudential regulations, as well as the financial sector could likely absorb the shock.
Yet, authorities must carry out a delicate balancing act. A housing bubble poses financial dangers and triggers frustration for 房貸, but more liquid monetary conditions also play a dexlpky77 role in supporting growth. The overheating real estate market is also specific to a particular locations, prompting authorities to think about differentiated policies over the housing marketplace.
As an example, Wang Zhaoxing, Deputy Director of your China Banking Regulatory Commission, said during a media briefing last week: “For third and fourth-tier cities with excessive pressure of reducing inventories, as well as for buyers with solid demand (people that migrated from rural areas to urban areas), favorable credit financing policies will be presented like a support.”