Reacting to the housing market’s slump, the People’s Bank of China (PBOC) has asked banks to prioritize loans to families buying first homes, and to improve efficiency so that borrowers can access mortgages quickly.
Liu Shiyu, a PBOC deputy governor, stressed the need for interest rates for first-time home buyers to be at a reasonable level.
He also urged banks to expedite housing loans.
The central bank’s advisory comes close on the heels of several mainland Chinese cities relaxing restrictions imposed on home purchases. Both the central bank’s advisory and the relaxations on home purchase are believed to be the government’s reaction to the growing impact of the poor housing markets on the country’s decelerating economy.
Housing sales by value saw a 9.9% drop during the year’s first four months, compared with a year earlier. Housing starts also dropped 24.5% over the same period. In April alone, home sales fell 18% from the previous month, according to the National Bureau of Statistics.
After April 2010, China imposed a slew of measures to cool property prices, amid fears of a property bubble - higher down payments, limits on the number of houses that people can buy, the introduction of a property tax in some cities, and the construction of low-income housing. Over 40 cities in China bought in these measures to various extents.
Now, the extent of the resulting slowdown is alarming the authorities.
This article was republished with permission from Global Property Guide.