Insiders believe that credit policies will be tightened as a result of the tight regulatory policies on the property market
The regulatory policies on the property market have been tightening since the fourth quarter of last year, the interest rate of loans for housing purchase in particular.
The cost of capitals has been hiking since 2017, indicated Zhang Dawei, chief analyst from Centaline Property. As the regulatory policies on the property market continue tightening, it is certain that credit policies will be tightened.
Based on the data of 533 branches of 66 banks in 35 key cities, the average interest rate for the first house was 4.99 percent in July, 102 percent of the benchmark interest rate. It hiked 2.25 percent from the previous month and surged 12.38 percent from 4.44 percent in July 2016. As for the preferential interest rate, only 22 banks provide preferential interest rate in July, 56 fewer than the previous month. Among tier-1 cities, only one bank in Beijing provides preferential interest rate and clients can enjoy 5 percent off. Among tier-2 cities, over 80 percent banks implement the benchmark interest for the first house.
Yan Yuejin, research director with E-house China R&D, told the reporter from Securities Daily yesterday that what makes banks confused includes not only lending rate, but also the length of review from banks and whether the loans will be issued on schedule after the review is passed. All of these factors are uncertain. Generally speaking, buyers purchase houses mostly through mortgage. If mortgage rate increases or the loan isn’t approved for a long time, they will absolutely reschedule their plans. Especially after this round of housing price hike, pressure on home buyers worsens. In addition, commercial banks tightened credit policy, which will indeed impact their pace and plan of buying houses.
In fact, property market has cooled down a lot as demand in the real estate market was tightened since the beginning of this year.
According to statistics, the year-on-year growth in prices of newly-built commercial house in 15 tier-1 cities and some hot tier-2 cities continued to drop in July. Among the four major tier-1 cities, Shanghai saw new house price stable but second-hand house price down for the second consecutive month. Prices of both new houses and second-hands houses in Guangzhou surged yet at a slower pace. New house price in Shenzhen fell again but second-hand house price turned to rise. Beijing suffered the biggest decline with new house price down for the second month and second-hand house price down for the third month consecutively. Meanwhile, it saw the biggest drop in second-hand house price for three consecutive months.
As a result, real estate market surrounding Beijing also stayed sluggish in July. Transaction volume of new houses in Gu’an county, main urban area of Langfang city, and Xianghe county and Yanjiao town to the north of Langfang city continued to decreased. Yangjiao even saw zero transaction. The real estate market surrounding Beijing once benefited from investment demand spilling from Beijing, but they are completely quiet now.
In the opinion of Hu Jinghui, vice-president of 5i5j, housing market across China showed a downturn trend in July. Particularly, transaction in tier-1 cities and some major tier-2 cities with strict restrictions over home purchase, loans and selling was flat and prices began to plunge. Even though without plunge, the price growth is narrowing. Overall regulation takes remarkable effect. But noticeably, the target of real estate regulation policy is to prevent significant ups and downs in housing prices. Implementing policies specific to different cities should ease overheating pressure in tier-1 and tier-2 cities and inventory pressure in tier-3 and tier-4 cities, but should also maintain the overall real estate market steady.
Translated by Vanessa Chen & Star Zhang
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