Cross-posted from Investing in Chinese Stocks.
The Chinese media dub the lifting of buying restrictions as the first market rescue. The second rescue was the new mortgage policies. Now local officials are begging for a third bailout in Beijing.
In the days before and after the national holiday, many local government officials traveled to Beijing and met with government officials, including the Ministry of Housing, as well as holding small meetings with central bank officials. They are asking for more policy easing. Local officials are saying that banks are constrained and the mortgage easing isn’t hitting the ground in smaller cities. First tier cities aren’t much better; in Shanghai the discount off prime offered by banks is 5%, nowhere near the 39% allowed by the new policy. In Shenzhen, a bank manager quoted in the article below said bank financing costs are high, making discounts difficult.
A source close to officials in the Hunan housing department said that the central bank must loosen monetary policy and make sure policies are implemented at the commercials banks in order for credit to flow. A source close to the Ministry of Housing in Beijing, however, says the government is taking a wait-and-see attitude on the current policy adjustment. The central government is also planning next year’s economic policies, and real estate is only one part of the picture.
Should sales fail to recover in October, one widely rumored move is a cut in the time required to qualify for an exception from real estate sales tax, from 5 years down to 2 years. Other tax cuts at the national or local level may also form the basis of round three of the real estate market rescue.
Activity has increased in October following the mortgage easing though. Centaline has seen customer traffic for existing homes climb 60% over September in the six largest cities. It has also seen prices climb across the board, with the prior week in Beijing seeing a 13.4% increase in average transaction price. Home sellers are refusing to negotiate again and raising their prices. This has some talking of a bifurcated market, with inventory overhang weighing on some cities, but prices rising in others.
All year I’ve been saying the central bank is not going to ease monetary policy based on the statements made by top officials. I realize the government could change its mind on a dime if need be, but there’s been zero sign from the officials that count; their comments are as stridently against easy money as they were earlier in the year. Were the housing market to bifurcate, that will be the stake through the heart of easy money. There’s absolutely no way, short of a crisis, that monetary policy will ease in the face of rising prices because it would immediately reflate the housing bubble, as fast as a match lights gasoline thanks to all the easing policies currently in place.
iFeng:地方官员频繁进京表达诉求 第三轮救市隐现
