Arab Today, arab today relaxed credit makes little impact on housing
Last Updated : GMT 18:19:36
Arab Today, arab today
Arab Today, arab today

Relaxed credit makes little impact on housing

Arab Today, arab today

Arab Today, arab today Relaxed credit makes little impact on housing

Beijing - Xinhua

The 50-basis-point cut in the reserve requirement ratio for commercial banks by the People\'s Bank of China on Friday, which is taken as a move to ease credit restrictions, will unlikely produce much of an impact on the country\'s struggling housing market. The central bank\'s cut in the amount that banks must hold in reserve will bring the ratio to 20.5 percent for large banks and 17 percent for small and medium-sized ones. Estimates said that about 400 billion yuan ($64 billion) of liquidity capital could be released following the reduction. Amid a drastic decline in the country\'s funds outstanding for foreign exchange and domestic commercial banks being plagued by lending insufficiency, the market has been anticipating such a move since the central bank\'s last cut that took effect on Dec 5, the first reserve reduction in three years. Expectations remained particularly high around the country\'s Lunar New Year on Jan 22. The later-than-expected announcement by the monetary authorities reflects its cautious manner in pushing for monetary policy adjustments. The message that the reserve cut will transmit to the market, along with the 400 billion yuan capital to be released, will produce certain effects on the domestic market, but we should not overestimate its effects on the real estate market as some analysts have predicted. Despite being regarded as a sign of the country\'s relaxation of its years-long restrictions on bank lending, the latest reserve cut is more a kind of slight monetary policy adjustments to adapt China\'s economy to domestic and global changes. It will not cause fundamental changes to the backbone of the country\'s tightening monetary policy. Some market analysts believe that part of the released liquidity will likely flow to the housing market and will help ease the ongoing funding shortage that has hit many developers. This, they believe, will possibly change the trend of the country\'s persistent regulation of the housing market. The reserve reduction will not mean the government\'s intention of relaxing its monetary policy on the housing market. Currently, the differentiated credit policy, whose core is putting a ban on third-home purchases by local residents and second-home purchases by non-local residents on mortgage loans, has made the biggest contribution to a lingering slump in the domestic housing market. Without essential changes to such a policy, there is no possibility for the latest reserve cut to refuel a new round of property speculation or tempt more potential homebuyers into swarming into the housing market. It is expected that without the participation of speculators whose speculation costs and risks have drastically increased following the adoption of the differentiated credit policy, the ensuing downward adjustments to domestic housing prices will remain inevitable whatever macroeconomic and monetary policy changes are adopted. At a time when expectations continue running high for a downturn housing tendency, most potential and self-accommodating homebuyers will likely bet on the decline of prices and not enter the market. This also reveals that the relaxation of the country\'s credit policy is not expected to produce considerable impact on the housing market. Some local governments that have become dependent on land sales and property developers for fiscal revenues have longed for relaxation of the country\'s tightened monetary policy so potential homebuyers can enter the market to break a lingering stall in home sales. For many potential homebuyers, the biggest problem, however, is not whether the country\'s credit policy will be relaxed, but their under-capacity to buy still expensive homes and whether housing prices will fall within their payment capacity. It is expected that the majority of potential homebuyers can enter the market only after housing prices decline to a reaonable level, which will really help the struggling housing market pull out of a lingering dilemma. For indebted and funds-thirsty property developers, the latest reserve cut will also not change their under-funding predicament. In recent years, the funds composition of developers has undergone some essential changes with bank loans only holding a small portion. For example, in 2011, developers nationwide gained a total of 8.3 trillion yuan for property development, of which only 1.25 trillion yuan came from bank loans, about one-seventh of the total funds. Besides, the strict monitoring and restrictions put in place by the authorities over some high-risk investment projects also make it more difficult for developers to gain access to banking loans. Under these circumstances, even a relaxed credit control is unlikely to cause the flow of too much funds to the housing market following the latest reserve cut. Only when self-accommodating housing demands instead of speculation dominates the country\'s housing market, a new and sustainable boom could boost the struggling sector. The author is a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences.  

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today relaxed credit makes little impact on housing Arab Today, arab today relaxed credit makes little impact on housing

 



Arab Today, arab today
Arab Today, arab today Jordan airline suggests flyers 'talk'

GMT 11:59 2017 Friday ,24 March

Jordan airline suggests flyers 'talk'
Arab Today, arab today 5 Crafty Must-Have Limited-Budget Ideas

GMT 17:03 2017 Saturday ,25 March

5 Crafty Must-Have Limited-Budget Ideas
Arab Today, arab today Rebel supporters flood Yemen streets

GMT 06:39 2017 Monday ,27 March

Rebel supporters flood Yemen streets
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemen children dream of school

GMT 07:25 2017 Friday ,24 March

Yemen children dream of school
Arab Today, arab today Trump to roll back Obama clean power plan

GMT 11:10 2017 Monday ,27 March

Trump to roll back Obama clean power plan
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Uber grounds self-driving cars

GMT 09:11 2017 Monday ,27 March

Uber grounds self-driving cars
Arab Today, arab today Audi RS 5 Coupe acquires new design

GMT 13:22 2017 Thursday ,23 March

Audi RS 5 Coupe acquires new design
Arab Today, arab today Nermein Al Fekki films “Foxes in the Valley”

GMT 09:58 2017 Saturday ,25 March

Nermein Al Fekki films “Foxes in the Valley”
Arab Today, arab today Salvage of South Korea's Sewol ferry

GMT 04:51 2017 Friday ,24 March

Salvage of South Korea's Sewol ferry

GMT 06:21 2017 Friday ,24 March

MP submits a petition to dismiss university head

GMT 18:57 2017 Tuesday ,21 March

Accessories designer reveals her new collection

GMT 15:25 2017 Tuesday ,21 March

2017 already marked

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures

GMT 20:03 2017 Saturday ,25 March

Health expert warns from dust sensitivity

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 19:27 2017 Saturday ,11 March

Boualsof launches "Priestess Kahina" collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday