BEIJING - The
central bank may raise housing mortgage down
payments dramatically in a bid to cool down the
red-hot property market.
The People's Bank
of China (PBoC) is mulling over a new mortgage
policy to curb housing price hikes; and could
raise the amount from the current "20% to 40 or
50%," reported the 21st
Century
Business Herald May 11, quoting "a well-informed"
source.
The newspaper did not make it
clear if the top rate would apply only to such
sectors as luxury housing or second properties; or
whether low-price housing would fall in its ambit.
The central bank refused to comment on the report.
Analysts and economists agree that the
central bank might take further measures to rein
in the property prices but expressed skepticism
over such a hefty rise in down payments.
"It is quite unlikely that the central
bank would raise the down payment by such a huge
margin," said Yi Xianrong, a research fellow at
the Financial Research Center of the Chinese
Academy of Social Sciences. "It is sound if the
level is raised to 30%. The current 20% threshold
is low," said the researcher.
According to
official statistics, property prices in 70 large-
and medium-sized Chinese cities rose an average of
5.5% in the first quarter from the same period in
2005, prompting many to call for strong government
action to curb the trend.
The Beijing
Construction Committee issued a regulation May 10,
to take effect June 1, stipulating that property
developers that hold back on new houses to reduce
supply in expectation of higher prices will not be
allowed to sell new houses for at least one month.
But some critics say such measures will lead to
the market further tilting to the supply side, and
the real burden would fall on homebuyers.
Housing prices in Beijing surged around
1,000 yuan ($124) per square meter in the first
two months of this year, up 17.3% from the same
period last year, according to the Beijing
Construction Committee.
"A particularly
large share of new lending in the first months of
2006 went to real-estate developers," the World
Bank said in its latest economic update on China.
"Bank credit for real estate development jumped,
absorbing about half of the total credit growth in
the first two months of 2006," it said on May 10.
The central bank raised its benchmark
one-year lending rate by 27 base points to 5.85%
in April, a move that was widely seen as to slow
down the sizzling economy, which grew 10.2% in the
first quarter.
"It is expected that the
central bank will take further steps to finetune
the economy," said Li Yongsen, an economist with
Renmin University of China. "But what measures it
will take, be it rate rises or down payment hikes,
will depend on the market feedback from the rate
rise last month," Li said.
The
Chinese-language International Financial News
reported May 11 that in its recently-issued 2006
credit guidance for Shanghai, the central
bank's Shanghai office recommended that real
estate-related credit supply continue to be
heavily regulated.
