Concrete Analysis | Easing measures aim to boost China's slowing real estate market
With slow sales and high unsold inventory in lower-tier cities weighing on the Chinese property market, Beijing is sparing no effort to restore momentum by relaxing monetary policies and regulatory measures
On March 30, the People's Bank of China the Ministry of Housing and Urban-Rural Development (MOHURD), the China Banking Regulatory Commission and the Ministry of Finance jointly issued two easing measures in order to boost the slowing real estate market and China's economy.
These easing measures were the first in five years and included a lower down payment of 40 per cent for families with a cleared mortgage buying their second homes (against 60 per cent to 70 per cent previously), and a relaxation of sellers' capital gains tax after holding a property for two years (against five years).
The new measures came as no surprise to the market, as all major economic indicators were alarming.
According to DTZ Residential, developers were cautious in re-investment due to slow sales and high unsold inventory in the lower-tier cities, resulting in a slowdown in national new homes investment of 8.5 per cent in the first quarter of this year, the lowest growth rate in the last 16 years.
New starts and new homes sales volume dropped 20.9 per cent and 9.8 per cent respectively (year on year) during the same period.
DTZ Residential's survey shows that the unsold inventory between 2011 and the first quarter of this year has exceeded 1.32 billion square metres, let alone the historical unsold stock of another 1.5 billion square metres.
