China's easy loans expected to drive home prices, despite tightening

Hopefluent group

06/10/2016 08:29

* 14 cities impose cooling measures in past six days 
    * Tightening steps not as severe as those in 2013 
    * Panic buying may subside but further gains expected 
-agents 
 
    By Clare Jim 
    HONG KONG, Oct 6 (Reuters) - Readily available, cheap 
mortgages and strong demand are likely to keep China's property 
market rising, even if restrictions announced in more than a 
dozen cities over the past week dampen sales and prices over the 
short term, real estate agents said. 
    The overheated market is worrying authorities who want to 
stop price bubbles in higher tier cities, but need to stimulate 
an economy that is sliding toward its slowest growth since 2009. 
 urn:newsml:reuters.com:*:nL3N1C41BA 
    In the past six days, 14 Chinese cities imposed 
administrative restrictions on home purchases to curb property 
speculation.  
    The commercial capital Shanghai and Shenzhen, dubbed 
"China's Silicon Valley" and home to the most expensive property 
in the country, had led the way in March, bringing in stricter 
rules that marked the first tightening measures since 2013. 
    The form and strength of the new restrictions varied from 
city to city, but included higher mortgage downpayments for 
second and third time home buyers, in a bid to stem the flow of 
cash into the red-hot property market. 
    Central bank data showed that banks in August made 529 
billion yuan in household loans, with mortgages accounting for 
55.7 percent of that, and policymakers have expressed concerns  
over rising debt and banks' exposure to mortgages. 
    Still, market observers, say the measures taken so far were 
less severe than those seen in 2013, as it remained easy to 
raise a cheap mortgage. 
     "Compared to restrictions imposed in 2013, there's still no 
tightening on mortgage rates this time. The buying cost for home 
buyers is still at a historical low," Andy Lin, market research 
director of Hopefluent  0733.HK  Real Properties (China) based 
in Shenzhen, said. 
    Lin said his company's clients are not first-time homebuyers 
and can easily afford higher downpayments so the impact was 
expected to be limited.  
    The most recent measures also included limiting divorced 
adults to buying one home in the cities of Shenzhen and Nanjing, 
after policies saw couples scrambling to divorce - on paper at 
least - in the hope they could buy a second home.  
    Speculators searching for the next property hot spot have 
turned to smaller, inland cities like Changsa during the past 
few months as prices in major cities became more 
frothy. urn:newsml:reuters.com:*:nL3N1C605Q 
    China's average new home price climbed 9.2 percent in 
August, up from 7.9 percent in July, official data showed. But 
big cities such as Shenzhen and Xiamen posted much bigger gains 
at 37 percent and 44 percent, respectively.  urn:newsml:reuters.com:*:nL3N1BV0L1 
    Property agents said the immediate impact of the new 
restrictions had not yet been reflected as many people were 
travelling during the Golden Week holiday.  
    In some second-tier cities, such as Hefei where home prices 
rose 40 percent in August, property agents said the price rises 
reflected a rush to buy in anticipation that new restrictions 
would be introduced. 
    "Panic buying may subside now that the measures are 
imposed," said Luo Fang Fang, a researcher at property agent 
Centaline in the city of Hefei, capital of Anhui province.  
    Analysts said smaller cities that are showing signs of 
overheating are likely to tighten rules next, but they did not 
expect a nationwide tightening as the stock of unsold homes in 
most lower-tier cities remain high.     
    "Nationwide policy should remain accommodative, because in 
the next six months the heat in the market must be transferred 
from ...(major cities) to broader Tier-3 cities," Citi analyst 
Oscar Choi said in a report this week. 
    Choi said the market strength needed to spread the smaller 
cities if the government was to achieve its goal of boosting 
construction activity, whittling down the stock of unsold homes 
and developing the satellite cities. 
 
 (Reporting by Clare Jim; Editing by Anne Marie Roantree and 
Simon Cameron-Moore) 
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters 
Messaging: clare.jim.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA PROPERTY/