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Rate cut to cast little impact on housing
By Cherry Cao |
June 8, 2012, Friday
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Online Edition
Online Edition
THE central bank's unexpected cuts on interest rates Thursday evening may leave positive, though not major impact, on the country's housing market, industry analysts said today.
"This is absolutely good news for mortgage payers but the amount involved is still far from attractive to coax potential buyers to enter a deal if we consider the average cost of a home in Shanghai," said Gong Min, a senior manager at Shanghai Centaline Property Consultants Ltd, operator of the city's largest estate chain in terms of transaction value.
"No signs for any real estate policy loosening could be expected in the short term and the overall subdued sentiment in the property market will remain generally unchanged despite the interest rate cuts."
For a 20-year, 1 million yuan (US$158,000) in mortgage, the 25-basis-point cut on the benchmark one-year lending rate will allow mortgage payers to pay 150 yuan less each month. However, prices of new homes, excluding government-subsidized affordable housing, still stood at a high of 22,450 yuan per square meter on average in the city last month, according to data released by Shanghai Deovolente Realty Co.
A Barclays report released today estimated that the latest rate cut will only have the equivalent effect as to a 2 percent cut in end home prices.
The move, which allows banks to set lending rates by as low as 80 percent of the benchmark, or 10 percentage points lower than previously, has also made a 20 percent discount on mortgage rates for first-time home buyers possible now, compared to the previous ceiling of 15 percent.
"This is absolutely good news for mortgage payers but the amount involved is still far from attractive to coax potential buyers to enter a deal if we consider the average cost of a home in Shanghai," said Gong Min, a senior manager at Shanghai Centaline Property Consultants Ltd, operator of the city's largest estate chain in terms of transaction value.
"No signs for any real estate policy loosening could be expected in the short term and the overall subdued sentiment in the property market will remain generally unchanged despite the interest rate cuts."
For a 20-year, 1 million yuan (US$158,000) in mortgage, the 25-basis-point cut on the benchmark one-year lending rate will allow mortgage payers to pay 150 yuan less each month. However, prices of new homes, excluding government-subsidized affordable housing, still stood at a high of 22,450 yuan per square meter on average in the city last month, according to data released by Shanghai Deovolente Realty Co.
A Barclays report released today estimated that the latest rate cut will only have the equivalent effect as to a 2 percent cut in end home prices.
The move, which allows banks to set lending rates by as low as 80 percent of the benchmark, or 10 percentage points lower than previously, has also made a 20 percent discount on mortgage rates for first-time home buyers possible now, compared to the previous ceiling of 15 percent.
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