Housing deals will resume in 2022 in leading Chinese cities as buyers enter fray with pent-up demand after four years of draconian controls

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Transactions could return to the Chinese housing market in 2022, especially in the country’s four top-tier cities, as monetary policy easing and market mitigation measures prompt genuine buyers to return to the fray.

Median house prices in Beijing, Shanghai, Guangzhou and Shenzhen could rise by no more than 5% – the level that raises the alarm on property bubbles, causing policymakers to overwork – in the new year, while the financings promised by the monetary authorities help the leveraged developers get their projects back on track, while the real buyers get their mortgages.

“All eyes are on mortgage lending as it was the biggest stumbling block to home purchases by most buyers with real demand,” said Yin Ran, a Shanghai-based angel and real estate investor. . “Many of them see a silver lining after leaders decide to make economic stability their top priority in 2022.”

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The prognosis is a welcome respite from the relentless attempt to curb the surge in house prices that began in the fall of 2017. Authorities have introduced a series of draconian measures that have infiltrated all aspects of the economy, bank loans to capital gains tax and even divorce proceedings for homeowner couples, to curb speculation and tame prices.

Price of used houses in China in Beijing, Shanghai, Guangzhou and Shenzhen alt = Price of used houses in China in Beijing, Shanghai, Guangzhou and Shenzhen>

At the conclusion of the Chinese government’s central annual economic work conference on December 10, policymakers have stressed that economic stability must be ensured in 2022, raising buyers’ expectations for a loosening of credit. The government has also committed to “first charge” policies supporting economic growth and maintaining social order.

It’s a relief for Xiao Yue, a 35-year-old Shanghai employee who failed to close her purchase in June because her bank was reluctant to lend her enough to afford her dream home.

“We are keeping our fingers crossed that monetary policy is eased soon,” she said. “In Shanghai, where houses are extremely expensive, middle-income earners cannot own a house without bank loans.”

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“Bank restrictions on mortgage credit [forced] many deals have been canceled in the past six months, “said Song Yulin, senior executive at Baonuo real estate agency in Shanghai.” It makes no sense to restrict the purchase of homes by people who don’t own no house. “

Xiao, a first-time buyer, signed a preliminary contract in March to buy a 4 million yuan (US $ 627,000) apartment on the secondary market. Under Shanghai lending rules, she had to pay 30% of the value of the house up front, or 1.2 million yuan, before paying the rest in mortgages.

However, his bank valued his property at only 3 million yuan and was only willing to lend him 2.1 million yuan, which left him with a shortfall of 700,000 yuan and few options aside. give up its purchase.

“A lot of the measures to curb over-sampling have ended up hurting buyers like us, who have a real demand for housing,” she said. “Those responsible for making housing policies need to make sure that the policies are sound before they are enacted.”

An agent shows potential buyers the layout of a new residential development at a real estate fair in Shanghai on March 15, 2009. Photo: Corbis via Getty Images alt = An agent shows potential buyers the layout of a new residential development at a real estate fair in Shanghai on March 15, 2009. Photo: Corbis via Getty Images>

To reduce housing demand, banks are delaying approving loans, taking up to 50 days to sign mortgages, according to a Beike Research Institute study that sampled the average wait time in 72 major cities nationwide . June.

The wait time was a third longer than a year ago. Dongguan and Zhongshan, two provincial cities in southern China Grande Baie region, exceeded the balance 108 days before the approval of the standard mortgage.

That may soon change, after the People’s Bank of China ordered banks to reduce reserves they stayed with the central bank to free up 1.2 trillion yuan in liquidity for the economy, the largest injection of financial liquidity in three years. This was followed two weeks later by the first drop in borrowing rates in two years.

Sales staff present models of a residential complex to visitors at the Dalian Spring Real Estate Fair in Dalian, Liaoning Province, April 12, 2018. Photo: Reuters. alt = Sales staff present models of a residential complex to visitors at the Dalian Spring Real Estate Fair in Dalian, Liaoning Province, April 12, 2018. Photo: Reuters.>

Together, the easing of monetary policy was reflected in bank lending. Shanghai developer raft has been hit on the arm on December 15 because the banking authorities encouraged local lenders to grant them new loans build rental housing.

The Shanghai headquarters of the People’s Bank of China and the local branch of the Banking and Insurance Regulatory Commission of China acted as intermediaries between lenders and developers with the aim of strengthening rental housing construction in the financial capital of the continent where high house prices have eroded competitiveness.

“A healthy real estate market is always desirable in China because of its importance to the national economy and tax revenue,” said Wang Zhen, vice president of the Shanghai Academy of Social Sciences. “The real estate sector will continue to grow.

This article was originally published in the South China Morning Post (SCMP), the most authoritative voice on China and Asia for over a century. For more SCMP stories, please explore the SCMP application or visit the SCMP Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

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