HOMES: RETURN OF STABILITY
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