State Bank of In­dia signs MoU with Credai

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State Bank of In­dia and real es­tate de­vel­op­ers’ body Credai have signed a mem­o­ran­dum of un­der­stand­ing ( MoU) to jointly con­duct var­i­ous ini­tia­tives to­wards de­vel­op­ment of the realty sec­tor. The MoU will be in force for a pe­riod of three years. Each of them will use their in­di­vid­ual strengths and col­lab­o­rate in ar­eas to pro­mote hous­ing for all, which will be ben­e­fi­cial to the sec­tor, SBI said in a state­ment.

SBI will be a na­tional part­ner for all Credai ac­tiv­i­ties and both will j ointly work to­gether for var­i­ous mar­ket­ing ac­tiv­i­ties. The ticket size of new res­i­den­tial launches across top eight cities has seen an av­er­age de­cline of 14% year – on – year (y-o-y). This was a con­se­quence of many de­vel­op­ers re­cal­i­brat­ing their mar­ket strate­gies that in­volved re­duc­ing ef­fec­tive cost of their prop­erty and re­strict­ing the number of new launches in or­der to re­duce their in­ven­tory hold­ing, says a new re­port by Cush­man & Wake­field.

In ac­cor­dance with the mar­ket sen­ti­ments, the to­tal number of new hous­ing units de­clined dur­ing the year by 11% to ap­prox­i­mately 113,000 units. Of this, mid hous­ing seg­ment ac­counted for 56% of the to­tal unit launches fol­lowed by value hous­ing seg­ment at 32%. On a y-o-y ba­sis, value hous­ing seg­ment noted an in­crease of 22% to more than 36,300 units.

The high-end seg­ment, on the other hand, was im­pacted the most, wherein launches al­most halved to 12,000 units dur­ing the year.

In most cities de­vel­op­ers have sought to ra­tio­nalise ticket sizes es­pe­cially in the high-end and lux­ury seg­ments, which has been hit the most.

“The govern­ment has been re­silient in its ef­forts to cre­ate af­ford­able hous­ing and achieve its tar­get of Hous­ing for All by 2022 and is tak­ing steps to build in ben­e­fits for de­vel­op­ers to par­tic­i­pate. Post de­mon­eti­sa­tion, mar­kets have wit­nessed a slow up­take of res­i­den­tial prop­er­ties on ac­count of price and value mis­match. Con­se­quently, de­vel­op­ers are also relook­ing at their strate­gies to cre­ate bet­ter value for home­buy­ers,” says An­shul Jain, man­ag­ing di­rec­tor, In­dia, Cush­man & Wake­field. China has pledged to con­tain the coun­try’s fast-ris­ing home prices to its an­nual work re­port as a red-hot prop­erty mar­ket re­sisted cool­ing mea­sures and pur­chase re­stric­tions spread out from the big­gest cities.

Sev­eral lower-tier cities have raised the bar for home pur­chases this month as spec­u­la­tors from out­side flood smaller mar­kets, with home prices na­tion­wide con­tin­u­ing to rise.

The fi­nal ver­sion of the govern­ment work re­port said “con­tain­ing ex­ces­sive home price rises in hot mar­kets” will be a key fo­cus this year, ac­cord­ing to a fi­nal ver­sion of the re­port re­leased by of­fi­cial state me­dia Xin­hua.

The first ver­sion of the work re­port, de­liv­ered by pre­mier Li Ke­qiang on March 5, did not in­clude the phrase.

Home sales surged in the first two months of the year de­spite govern­ment mea­sures, though growth in real es­tate in­vest­ment showed signs of eas­ing, ac­cord­ing to data re­leased this week.

Lend­ing to house­holds, mostly mort­gages, ex­panded rapidly last year, ac­count­ing for 50% of all new loans, and re­mained high in Jan­uary. Peo­ple’s Bank of China (PBOC) Gov­er­nor Zhou Xiaochuan said last week that mea­sures to cool ris­ing house prices would slow mort­gage growth to some de­gree, though hous­ing loans would con­tinue to grow at a rel­a­tively rapid pace.

Sev­eral ma­jor banks in Bei­jing have tem­po­rar­ily stopped is­su­ing hous­ing loans since Fe­bru­ary, fi­nan­cial mag­a­zine Caixin said cit­ing bank and prop­erty agent sources, though the halt was due to a lack of loan quota, with ap­proval time­lines ex­tended but loans still be­ing granted.

China’s state-run banks typ­i­cally rush to is­sue loans early in the year to lock-in clients be­fore quo­tas for lend­ing are ex­hausted.

The bank­ing reg­u­la­tor and the PBOC have told banks to cur­tail new mort­gage lend­ing, sta­te­owned news­pa­per Eco­nomic In­for­ma­tion Daily re­ported, cit­ing un­named bank­ing sources.

Caixin cited reg­u­la­tor sources say­ing that the PBOC was mon­i­tor­ing lend­ing in real time and guid­ing banks to not al­low per­sonal loans to in­crease too much.

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