Sales of new homes in China increases by 12% in November

Buyers’ confidence was boosted after lenders eased mortgage rules 

After China’s housing market has landed in a tight spot, it is finally showing some positive signs following banks’ easing of mortgage approvals for homebuyers, as said in South China Morning Post. 

According to Central Wealth Securities, new homes covering 12 billion square metres across 42 major cities were sold in the first 20 days of November, which is a 12 percent increase from the same period in October. 

The increase comes after regulators asked banks to support the market and ease strict home loan approvals, in an attempt to help tame runaway property prices. 

“The recent positive news about the mortgages has boosted some buyers’ confidence, but more are still waiting on the sidelines,” said Cai Hongfei, an analyst with the Central Wealth Securities. 

Chinese authorities at the city, provincial and central government level have taken steps to boost the flagging housing market. On October 15, senior central bank official said at a press conference that some financial institutions had overreacted to the China Evergrande and Kaisa Group Holdings situation. 

Based on data by the People’s Bank of China, personal home loans in China increased by around one percent to RMB37.7 trillion (USD5.92 trillion) in October from the same period in 2020. 

Standard Chartered economists Hunter Chan and Shuang Ding wrote, “The slowdown of China’s real estate sector has become a major factor weighing down the country’s economic growth and it is mainly due to the tightened credit.” 

“We are expecting the credit environment towards property to improve in the coming quarters and we have seen strong signals from the authorities,” they said. 

Moreover, the National Bureau of Statistics (NBS) said the country’s monthly benchmark price index for new homes dropped for the first time in six years in September, by 0.1 percent on a monthly basis. 

Vice-Premier Liu He said at a financial forum in Beijing in October that “reasonable capital needs” of the property sector will be met to encourage health market development. 

Standard Chartered economists predict China’s outstanding property loans to increase by 10 percent year-on-year by the end of 2022. 

More: China’s new home prices fell by 0.2% in October

The government has tried to cool down the booming home sales by tightening mortgage practices, which has resulted in delays in loan approvals of up to 108 days in some cities. 

As lenders support first-time homebuyers through easing down-payment ratios and mortgage rates, the average interest rate for first-time buyers in 72 cities was at 5.69 percent in November, four basis points lower than the previous month.