HOMES: RE­TURN OF STA­BIL­ITY

China Daily European Weekly - - Business -

since the sec­ond quar­ter of last year, said the SUFE re­port.

De­spite a 142-per­cent month-on-month in­crease in sales vol­ume of pre-owned apart­ments in March to 17,370 units, the fig­ure re­mains the low­est in six years for March, and 7.06 per­cent lower than that of last year, ac­cord­ing to a re­search re­port from the Shang­hai Ex­ist­ing Prop­erty In­dex Of­fice.

“We ob­served pre-owned home prices have started to soften, and the wait-and-watch at­ti­tude of home­buy­ers gave them more room for bar­gain­ing,” says Zhou.

In South China, Shen­zhen saw its new home prices drop for seven months in a row, rank­ing first in the 70 ma­jor Chi­nese cities with a 2.3-per­cent de­cline in March, NBS data showed.

There is a piece of good news for se­nior home­buy­ers as In­dus­trial and Com­mer­cial Bank of China con­firmed that it has ex­tended the age limit for per­sonal prop­erty loan bor­row­ers to 70 from 65. The pol­icy took effect in the last week of April, China Na­tional Ra­dio re­ported.

Ac­cord­ing to the new pol­icy, a home loan ap­pli­cant who is 60 can ap­ply for a 15-year mort­gage; and those who are 55 can ap­ply for a 20-year mort­gage, which is “re­ally good news for se­nior home­buy­ers,” said a staff mem­ber deal­ing with home loans at ICBC’s Chongqing branch, CNR re­ported.

Mean­while, start­ing from the third quar­ter of last year, many com­mer­cial banks have tight­ened their home loan poli­cies with more re­stric­tions be­ing put on home loan ap­pli­ca­tions and ap­pli­cants.

Ac­cord­ing to Zhou from JLL, some banks have ex­tended the ap­proval pe­riod for loan ap­pli­ca­tions from a min­i­mum of one week be­fore to at least one to two months last year. She ex­pected the loan ap­pli­ca­tion process to be­come more smooth with more pol­icy clar­ity ex­pected to emerge this year com­pared with a year ago.

A net 400 bil­lion yuan ($63.32 bil­lion; 53.57 bil­lion eu­ros; £46.8 bil­lion) was re­leased in late April from the cen­tral bank’s re­serve of com­mer­cial banks’ de­posits, with an­other free­ing of 900 bil­lion yuan set to erase lenders’ li­a­bil­ity to the cen­tral bank through the Medium-term Lend­ing Fa­cil­ity, or MLF.

This mon­e­tary pol­icy oper­a­tion, or a re­duc­tion of the re­serve re­quire­ment ra­tio, or RRR, by 1 per­cent­age point in an in­no­va­tive way, is ex­pected to sup­ple­ment liq­uid­ity, es­pe­cially for small and medium-sized banks with­out mak­ing over­all mon­e­tary pol­icy too loose, ac­cord­ing to ex­perts.

“The re­duc­tion in RRR was to off­set the im­pact of the tight­en­ing of in­ter­bank lend­ing, mak­ing sure small banks have enough liq­uid­ity. This is in keep­ing with the gen­eral fi­nan­cial de-risk­ing that is tak­ing place and will un­likely have a sig­nif­i­cant im­pact on the prop­erty mar­ket,” says Macdonald.

Zhou agrees with the pro­jec­tion, adding that the loan environment will be tight­ened fur­ther na­tion­wide this year com­pared with a year ago, and it will fur­ther af­fect to­tal trans­ac­tion vol­ume of the home mar­ket.

Re­gard­ing the on­go­ing trade fric­tion be­tween China and the United States, Macdonald says the prop­erty mar­ket is un­likely to see any sig­nif­i­cant di­rect im­pact. But he also says: “It could im­pact busi­ness rev­enues and prof­itabil­ity. There­fore, it may en­cour­age com­pa­nies that might be af­fected to take ac­tion.”

Ac­cord­ing to Macdonald, pos­si­ble re­sults in­clude hold­ing off on large in­vest­ments, such as re­lo­ca­tion of of­fices and the as­so­ci­ated fit-out costs, re­duc­ing costs by po­ten­tially look­ing at de­cen­tral­ized lo­ca­tions if they need to re­lo­cate, and seek­ing more flex­i­ble op­tions for ac­com­mo­da­tions, such as co-work­ing or ser­viced of­fices.

Since third- and fourth-tier cities are tak­ing the heat of home price growth, the SUFE re­port pro­jected that home prices in first-tier cities will likely sta­bi­lize through­out this year.

Res­i­den­tial prop­erty gath­ers speed in lower-tier cities, even as met­ros with­stand curbs, higher prices

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