The recent downturn in China’s property market has alarmed not only investors but also the government. In May, the People’s Bank of China met with the country’s biggest lenders to urge them to grant mortgages in a more timely and efficient manner. The central bank’s move was part of the government’s broader efforts to revive a sagging economy without further inflating asset bubbles in the process.
But reactions from the banks have been mixed. Tracking by my company, research firm JL Warren Capital, shows that banks have indeed quickened home loan approvals, but they have also raised mortgage rates. Despite the central bank’s urging, low profits mean commercial banks are not eager to extend mortgages to consumers.
This has not helped the accelerating contraction in the Chinese housing market. During the first week of June, the total floor area sold in primary residential housing markets in 48 cities tracked by Centaline Property Agency was down 34% year-on-year. China’s “first-tier cities” — such as Beijing, Shanghai, Guangzhou and Shenzhen — saw the largest declines, with a 44% decrease in units sold year-on-year. Units sold also fell 36% and 15% year-on-year, respectively, in smaller second- and third-tier cities.
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Junheng Li, Forbes via CHINA US Focus http://ift.tt/1ymIndZ
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