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China Rate Cut, What's in It for the Property Market?

CNBC
China Rate Cut, What's in It for the Property Market? - China - property market


Shanghai-listed property stocks gained on Friday following an overnight cut in lending rates on expectations the move would boost demand for homes, however, Barclays says the policy easing will do little by way of making housing more affordable.



According to the bank's calculations, the 25 basis points cut in the benchmark lending rate will lead to a 2 percent reduction in home prices.

Andrew Lawrence, Director of Property Research at Barclays says this marginal drop will not make property more affordable and hence is unlikley to ramp up demand.

While home prices across the country have been in a steady decline over the last seven months due to measures by Beijing to rein in speculative buying and stabilize prices, they are still regarded as out of reach for the average homebuyer.

According to independent economist Andy Xie, property prices in the mainland need to fall 50 percent in order to become more accessible for end-users.


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