China's RRR cut to help promote liquidity in the housing market

By Huang Ge Source:Global Times Published: 2018/10/8 18:28:40

Beijing apartment sales cooling down during National Day holidays

Chinese central bank's latest effort to cut the reserve requirement ratio (RRR) will help provide more liquidity in the property market, which is expected to maintain stable growth and advance the country's real economy, experts said on Monday.

During the weeklong National Day holidays which ended on Sunday, China's property market has been cooling down compared with previous years.

The number of apartments that were sold from October 2 to 5 in Beijing stood at 41, while the number exceeded 100 in the previous year's Golden Week, industry news site reported on Monday, citing data available. Apart from first-tier cities, housing sales in some second-tier cities, including Hangzhou, East China's Zhejiang Province, Xiamen, East China's Fujian Province and Hefei, East China's Anhui Province, also cooled down, the report said.

The Chinese real estate market is trending downward in coming months, experts noted.

During the National Day holidays, the price of a housing project in Shanghai developed by Country Garden fell by some 30 percent since it started sales two months ago, news site reported on Sunday.

At a conference held by major Chinese property developer China Vanke Co in late September in Shenzhen, South China's Guangdong Province, a new slogan was unveiled, urging its staff to make the company survive amid the economic slowdown and cooling housing market, according to media reports.

As the domestic real estate sector has undergone a downturn and some large property developers have shown worries during recent months, the central bank's move to cut RRR will help hedge such stagnant market expectation, Song Ding, a Shenzhen-based market analyst at the China Development Institute, told the Global Times on Monday.

The People's Bank of China, China's central bank, said on Sunday it would cut the RRR by 100 basis points starting from October 15, injecting about 750 billion yuan ($109.2 billion) into the market, according to a statement on its website.

The Chinese government has been determined to curb surging home prices, but that does not mean the market will allow a big fall of housing prices, because it will immediately hit the Chinese economy, he said, noting that "it will be better if domestic home prices can be controlled within a narrow fluctuation range."

The RRR cut will also help support the domestic property market in terms of the actual use of capital, an industry insider surnamed Chen said. In the next step, domestic property companies and individual buyers are likely to gain moderately eased opportunities in borrowing loans from financial institutions, he told the Global Times.

Experts said that given that the Chinese economy is faced with a severe downward pressure, the domestic housing market is expected to secure its stable development, which will facilitate boosting China's economic development.

Newspaper headline: RRR cut to help promote housing liquidity

Posted in: ECONOMY

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