Home » Business » Real Estate
Interest rise to cool property market
By Cao Qian |
October 21, 2010, Thursday
|
Print Edition
Print Edition
CHINA'S unexpected interest rates rise, the first in 34 months, will help cool the housing market in the fourth quarter as more potential buyers adopt a wait-and-see attitude.
But industry analysts say the rise, which came into effect yesterday, won't have a significant impact on current mortgages because the 25 basis points increase was comparatively mild.
"The latest effort by the central bank, coupled with the recent round of tightening policies imposed on the home sales market by both central and local governments, will likely make more people sit on the sidelines instead of making quick purchases," said Song Huiyong, director of research at Shanghai Centaline Property Consultants Ltd.
"Consequently, home-buying momentum might somewhat ebb at a faster pace and there will also be larger room for price reductions,"
The People's Bank of China announced on Tuesday that the one-year benchmark deposit rate would rise to 2.5 percent from 2.25 percent while the one-year benchmark lending rate would increase by 25 basis points to 5.56 percent.
The rise, aimed at curbing asset price bubbles and keeping a rein on inflation, may have more of a psychological impact on mortgage payers rather than putting pressure on repayments, analysts said.
Centaline research showed that someone with a 20-year, 1 million yuan (US$150,000) mortgage would only be paying an extra 130 yuan per month.
"However, as further hikes are expected to be announced, declines in asset prices will become more likely as credit becomes more expensive," said Lina Wong, managing director for East and Southwest China operation at Colliers International, a real estate services provider.
"Although not specifically targeting the housing market, the policy, combined with tightening measures announced over the past months, will add downward pressure to both transaction volume and prices."
New home sales in Shanghai dropped 23 percent week-on-week to 346,000 square meters during the seven-day period ending October 17 after the latest round of rein-in policies by the local government, according to Shanghai Uwin Real Estate Information Services Co.
On October 7 the city put another brake on housing speculation by joining Beijing in capping the number of homes a family can purchase. A household is now entitled to buy only one home in the city "for a certain period of time."
While there was an immediate effect on transaction volumes, the average price of new homes remained firm, standing above the 20,000 yuan per square meter mark for the fourth consecutive week amid robust sales of high-end houses.
New homes were sold at an average of 22,376 yuan per square meter last week in the city, an increase of 11 percent from a week earlier, after 61 apartments at Star River, a high-end residential development in Minhang District, were sold for an average 48,910 yuan per square meter.
But industry analysts say the rise, which came into effect yesterday, won't have a significant impact on current mortgages because the 25 basis points increase was comparatively mild.
"The latest effort by the central bank, coupled with the recent round of tightening policies imposed on the home sales market by both central and local governments, will likely make more people sit on the sidelines instead of making quick purchases," said Song Huiyong, director of research at Shanghai Centaline Property Consultants Ltd.
"Consequently, home-buying momentum might somewhat ebb at a faster pace and there will also be larger room for price reductions,"
The People's Bank of China announced on Tuesday that the one-year benchmark deposit rate would rise to 2.5 percent from 2.25 percent while the one-year benchmark lending rate would increase by 25 basis points to 5.56 percent.
The rise, aimed at curbing asset price bubbles and keeping a rein on inflation, may have more of a psychological impact on mortgage payers rather than putting pressure on repayments, analysts said.
Centaline research showed that someone with a 20-year, 1 million yuan (US$150,000) mortgage would only be paying an extra 130 yuan per month.
"However, as further hikes are expected to be announced, declines in asset prices will become more likely as credit becomes more expensive," said Lina Wong, managing director for East and Southwest China operation at Colliers International, a real estate services provider.
"Although not specifically targeting the housing market, the policy, combined with tightening measures announced over the past months, will add downward pressure to both transaction volume and prices."
New home sales in Shanghai dropped 23 percent week-on-week to 346,000 square meters during the seven-day period ending October 17 after the latest round of rein-in policies by the local government, according to Shanghai Uwin Real Estate Information Services Co.
On October 7 the city put another brake on housing speculation by joining Beijing in capping the number of homes a family can purchase. A household is now entitled to buy only one home in the city "for a certain period of time."
While there was an immediate effect on transaction volumes, the average price of new homes remained firm, standing above the 20,000 yuan per square meter mark for the fourth consecutive week amid robust sales of high-end houses.
New homes were sold at an average of 22,376 yuan per square meter last week in the city, an increase of 11 percent from a week earlier, after 61 apartments at Star River, a high-end residential development in Minhang District, were sold for an average 48,910 yuan per square meter.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
