As the nation works to recover from a housing collapse, six of China’s largest banks announced on Monday that they would adjust interest rates on mortgages for current home loans in response to a request to do so from Beijing’s central bank, according to state media.
Since last week, Beijing has made a number of promises, the most recent of which are meant to stimulate the second-largest economy in the world.
For two decades, the property market, which is currently in a precarious position, has grown at an astounding rate and contributed around 25% of the GDP.
However, a protracted housing slump has turned into a significant growth hindrance as the nation’s leaders aim for a five percent growth rate this year, an estimate that economists say is optimistic considering the numerous challenges the economy confronts.
China’s six main national commercial banks, including the Bank of China, the Agricultural Bank of China, and the Industrial and Commercial Bank of China, decided to “adjust” mortgage rates for current house loans, according to a report released on Monday by the official news agency Xinhua.
The action was taken in response to Beijing’s central bank’s request to drop the rates in an effort to ease the burden on homeowners.
October 31 is when the rates will be adjusted, the banks told Xinhua.
In anticipation of more support, markets in Hong Kong and mainland China surged following the news.
On Monday, the news of more support for the property market sent equities in Shenzhen and Shanghai skyrocketing.
Among the biggest beneficiaries were real estate developers; shares of Kaisa shot up nearly 60%, Sunac gained over 16%, and Fantasia gained over 30%.
Three of the largest cities in China announced earlier on Monday that they will loosen regulations to facilitate property purchases.
The 37 million-person megacities of Guangzhou and Shenzhen in the south announced that potential homeowners would no longer have their eligibility checked.
There won’t be any limitations on the number of properties one may purchase in Guangzhou’s center, where it was previously illegal to possess more than two, the city announced.
Additionally, authorities in Shanghai, the richest city in the nation and a major economic hub in the east, announced on Tuesday that they would be reducing the required minimum down payment on a house from 20% to 15%.
The new regulations also specified that restrictions on the purchase of real estate in megacities by individuals originally from other regions of China would be loosened.
The impending “macro challenge” –
Yan Yuejin, an analyst for the housing industry, told AFP that “pressure” in the real estate market was behind the actions.
According to Yan, fewer people are purchasing real estate these days.
Yan stated that stimulating the property market would be crucial to accelerating the slowing domestic consumption, which is another significant growth inhibitor.
In one of the largest pushes to kickstart development in years, China’s leadership this week revealed a slew of measures aimed at bolstering the economy while cautioning that it was beset by “new problems.”
However, experts cautioned that the “bazooka” stimulus was probably still insufficient to boost the real estate market, and they were dubious about the extent to which Monday’s further actions would be helpful.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, stated in a note that “from a macro perspective these policies are not that important, as these cities account for a small share of the national property market.”
“Fiscal policy continues to be the key to addressing the macro challenge.”
Official figures released on Monday revealed that September saw a fifth straight month of manufacturing contraction, underscoring the government’s difficult task.
A crucial indicator of industrial production, the Purchasing Managers’ Index, was reported by the National Bureau of Statistics to be 49.8 points.
Nevertheless, it was better than the 49.5 predicted in a Bloomberg survey and was a little improvement over August’s 49.1 points.
A manufacturing activity expansion is indicated by a figure above 50, and a contraction is shown by a figure below that.
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AFP
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