China Real Estate: New Curbing Measures to be implemented in Beijing11 February, 2011, 14:48. Posted by Zarathustra
Tags: Beijing, Real Estate
Following the new 8 tough measure to curb home prices in China, the Beijing Authority seems to be planning their own version of rules (via Bill), and are rumoured to be announced on Saturday afternoon. Propaganda has been saying that the new rules will be even tougher than the national rules, although it is not very clear now how tough it can be, given that the “new” rules were quite tough already. While the exact details are not known, real estate developers and property agents are using this rumour to urge people to buy now (otherwise, they can’t buy after the weekend), pretty much like earlier when it was rumoured that Beijing will not allow people to buy cars, vehicle sales surged.
Will new measures work? The People’s Bank of China continued its tightening by raising interest rates earlier this week after series of interest rate hikes and increases of reserve requirement ratio, and these will have more effect on home prices than administrative measures which involved tweaking tax codes and restricting number of flats each family can buy. But as the policy gets tougher and tougher, the perceived increase policy risks will certain weigh on sentiments.
As inflation is likely to edge higher, the People’s Bank of China will likely to continue its policy tightening. It is still too early to call an economic slowdown, but bear in mind that the January Purchasing Managers Index showed slight decrease in the pace of expansion with higher input prices. The key question now is whether monetary tightening will be too aggressive such that a hard-landing is inevitable.
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