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Chinese authorities have introduced 房屋貸款 restrictions in a bid to ease concerns over the mounting housing bubble in China’s largest cities

On March 17, Beijing and three other major Chinese cities introduced a whole new round of lending curbs in order to suppress the overheating property market in China’s largest cities.

In the first two months of 2017, the entire investment in real estate development was RMB985.4bn ($142.9bn), up 8.9 percent year-on-year. For the very same period, sales of residential buildings were up 22.7 percent, in accordance with official data.

Price hikes are particularly pronounced in large cities where land for new developments is now increasingly scarce. By way of example, the Tier 1 cities of Beijing, Shanghai, Shenzhen and Guangzhou, have witnessed markedly greater price rises as opposed to those of other regions. Actually, estimates suggest it could take several years to be effective off existing housing inventories in many of China’s smaller cities.

China’s new housing policies would be the latest in a series of other tightening measures employed across the country over recent months

Beijing’s new measures include steeper requirements on down payments for buyers of any second home, which are up from 50 to 60 percent. Moreover, more and more people is going to be classed as ‘buyers of your second home’, where previously people who had already paid back a mortgage would have been classed as very first time buyers. Similar measures were used in the provincial cities of Guangzhou, Shijiagzhuang, Changsha and Zhengzhou. The brand new policies will be the latest in several other tightening measures employed throughout the country over recent months.

Just four days right after the new measures were announced, the OECD released its annual report about the Chinese economy, advising that authorities “urgently” address the overheating property market. The report stated: “Soaring property prices in Tier 1 cities and leveraged investment in asset markets magnify vulnerabilities and the chance of disorderly defaults.”

It further warned a collapse in housing prices would hurt several important sectors, including real estate property, construction, refurbishment and home appliances. This said, the report conceded the impact of such a housing industry collapse may be mitigated by stringent prudential regulations, as well as the financial sector could likely absorb the shock.

Yet, authorities must conduct a delicate balancing act. A housing bubble poses financial dangers and triggers frustration for 房貸, but more liquid monetary conditions also play a dexlpky77 role in supporting growth. The overheating housing marketplace is additionally specific to a particular locations, prompting authorities to take into consideration differentiated policies throughout the housing industry.

By way of example, Wang Zhaoxing, Deputy Director of the China Banking Regulatory Commission, said during a media briefing a week ago: “For third and fourth-tier cities with excessive pressure of reducing inventories, and for buyers with solid demand (those who migrated from rural areas to urban areas), favorable credit financing policies will be given as a support.”