Developers in Malaysia are asking for some breathing space. Cooling measures have affected their sales quite a lot. On the other hand, is it really that bad? Well, in China it has gotten so bad that the Chinese government has had to relax some of the cooling measures that were put in place. In other words, instead of cooling measures, they are now trying to stop it from cooling or at least warm it up a bit. ‘Long winter’ is not welcomed. According to Moody’s Analytics, property sector is very important as once it slows, it affects the materials, home appliances and transport too. This is why it accounts for one-quarter of China’s economy, Some of the measures that they have taken are as follows:
30% discount on mortgage rates even for second-home buyers. It was only for first-time buyers previously.
Downpayment levels cut from 60-70% down to 30%.
40 of 46 regional Chinese governments have abolished housing investment limits.
Now, banks can continue to lend to those buying their third homes and have no outstanding unpaid mortgages. This is for cities without any housing investment limits.
Banks are asked to disburse faster for mortgages and also lend to healthy developers with commercially viable projects.
To enable them to lend more, the banks should sell mortgage-banked securities and bonds with longer maturities.
To pay for the mortgages, the regulators said banks should sell mortgage-backed securities and bonds with longer maturities.
Developers were also encouraged to sell bonds in the interbank market
A pilot for real estate investment trusts would also be started to broaden financing channels.
If these are not able to warm up the property market or at least stop it from cooling too fast, I seriously think more would be done. As for the crash landing, since this is China, I do not think it will happen. Unlike America which has to borrow from the whole world when the mortgage crisis hit them, this will not happen in China. As it is, China does have the world’s largest currency reserve today. Thus, there are many more options at its disposal compared to America. The only unfortunate thing is, with China’s slowdown, it will also slowdown all its trading partners too, I think. Oops, that’s Malaysia. Let’s see what happens next in China.
written on 4 Oct 2014
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