Rate cuts not expected to help realty sector
China’s central bank’s targeted reductions in banks’ reserve requirement ratios won’t revive the property sector, making it likely that developers will have to offer more aggressive price cuts to raise cash, industry analysts said.
The People’s Bank of China (PBOC) on Monday announced a cut in the ratio by half a percentage point, but only for banks whose new loans to the farming sector or micro-sized and small enterprises exceeded half their total new lending in 2013.
“The aim is to channel credit to the rural sector and small firms. That move dashed the hopes of some property developers for a broad-based credit easing this month, increasing the probability that more developers will cut prices,” said Zhang Dawei, director of market research department at Centaline Property Agency Ltd.
According to Chang Jian, China economist with Barclays Plc, the PBOC has resisted calls for an across-the-board reserve requirement ratio cut.