Chinese authorities have introduced 房屋貸款 restrictions in the bid to help ease concerns over the mounting housing bubble in China’s largest cities
On March 17, Beijing and three other major Chinese cities introduced a new round of lending curbs in an attempt to suppress the overheating property market in China’s largest cities.
Inside the initial two months of 2017, the complete investment in real estate development was RMB985.4bn ($142.9bn), up 8.9 percent year-on-year. For the same period, sales of residential buildings were up 22.7 percent, in accordance with official data.
Price hikes are particularly pronounced in large cities where land for new developments is starting to become increasingly scarce. For instance, the Tier 1 cities of Beijing, Shanghai, Shenzhen and Guangzhou, have observed markedly greater price rises compared to those of other regions. Actually, estimates suggest it could take a few years to work off existing housing inventories in some of China’s smaller cities.
China’s new housing policies are definitely the latest in several other tightening measures employed throughout the country over recent months
Beijing’s new measures include steeper requirements on down payments for buyers of your second home, which are up from 50 to 60 %. In addition, more and more people will likely be classed as ‘buyers of your second home’, where previously people who had already paid off a mortgage could have been classed as first time buyers. Similar measures were working 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 across the country over recent months.
Just four days following 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 chance 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 those a housing market collapse may be mitigated by stringent prudential regulations, along with 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 housing industry can also be specific to a particular locations, prompting authorities to think about differentiated policies throughout the housing market.
For example, Wang Zhaoxing, Deputy Director in the China Banking Regulatory Commission, said in a media briefing a couple weeks ago: “For third and fourth-tier cities with excessive pressure of reducing inventories, and then for buyers with solid demand (people that migrated from rural areas to urban areas), favorable credit financing policies will be presented as being a support.”