Property News · October 13, 2016

China to tighten fund flow into property


Shares in real estate developers plunged after news
Financial regulators are preparing to constrict the flow of funds into the real estate sector, Bloomberg reported this week, citing anonymous sources. Panic would be unwarranted though, analysts said.
China’s tightening talks are targeting overheated metropolitan areas, where demand by prospective owner-occupiers exists, as opposed to low-tier cities where such demand is lumpy.
“In contrast to past cycles, demand in these metro cities could take a break but not evaporate,” Oscar Choi, head of Asia-Pacific property at Citi Research, told Barron’s.
More: China’s residential market to stay strong in 2017, says Citigroup
Chinese mortgage rates have dropped to 4.4 percent for first-time home buyers, compared with 6.7 percent to 8.5 percent in the past, Citi pointed out.
People familiar to the matter tipped Bloomberg that the central bank, China Banking Regulatory Commission, and China Securities Regulatory Commission are mulling restrictions on financing for property investments of speculative nature as well as funds for land sales.
The institutions did not immediately return Bloomberg’s requests for comment.
The Hang Seng Index dropped 1.6 percent Tuesday after the news broke. Shares receded mostly from real estate developers and suppliers of cement, glass, and iron.
Bloomberg’s revelation comes after a week of property curbs unfurling throughout mainland China, where at least 21 cities have required higher mortgage downpayments and disqualified certain buyer types. Shanghai began clamping down on unapproved price movements in residential projects last week.
Read next: Revealed: 11 most expensive cities for luxury homes in Asia

Source : property-report.com
Read more…China to tighten fund flow into property

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