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China’s central bank pledged support for first-home buyers as a crackdown on real-estate speculation threatens to trigger a property slump in the world’s second- biggest economy.
Officials will increase support for construction of affordable housing and ensure that “loan demand from first-home families” is met, the People’s Bank of China said on its website today.
A government clampdown to make housing affordable is cooling prices and driving down transactions just as Europe’s sovereign-debt crisis caps export demand. Fitch Ratings said today that a “hard landing” for China is a key global risk, after the International Monetary Fund cautioned yesterday that a deterioration in Europe could cut the nation’s growth rate almost in half.
“The government doesn’t want to see home transactions slide too fast -- that may hurt economic growth,” said Lu Ting, a Hong Kong-based economist at Bank of America Corp.
Home prices in 52 of 70 major cities declined in December from November, according to government data. Contract sales, or sales booked before apartments are completed, dropped 30 percent in December at China Vanke Co., as the country’s biggest developer by market value offered fewer homes from November.
No ‘Wild’ Bubbles
China’s economy grew 8.9 percent in the fourth quarter from a year earlier, the slowest pace since the first half of 2009. Home prices have declined in cities from Beijing to Wenzhou.
Jim O’Neill, the economist who coined the term BRIC for developing nations Brazil, Russia, India and China, said Jan. 17 that Chinese officials had acted to avoid the “wild housing bubbles” that many western nations had experienced. O’Neill, chairman of Goldman Sachs Asset Management, said he doesn’t see a “hard landing” for China.
The central bank said today that it will continue to implement “differentiated” housing loan policies. Down payment ratios and mortgage rates vary for first and multiple home buyers and local authorities have a range of restrictions, including based on whether buyers are local residents.
“The PBOC is opening a small window for property and is starting selective easing on the sector,” said Yao Wei, a Hong Kong-based economist at Societe Generale SA. “Real estate activities have cooled a lot in recent months” threatening to hurt economic growth, she said.
Separately, the central bank also said it would “regulate order in the gold market and strengthen management.”
“The regulation seems a continuation of recent central bank moves to crack down on the rampant illegal underground trading in gold derivatives,” said Song Qing, a fund manager at Lion Fund Management Co., China’s first asset manager to place money in foreign exchange-traded gold funds.
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