A number of Chinese cities recently cut interest rates on personal first suite commercial loans and housing fund loans to boost the home buying market. However, property analysts say that China’s economy is in decline, and market confidence will not be restored by cutting interest rates alone.
Starting on Oct. 14, several banks in Tianjin decreased their first suite loan rates from 4.1 percent to 3.8 percent, and Shijiazhuang, the capital of Hebei Province, lowered its interest rate from 4.1 percent to 3.9 percent.
The lowering of mortgage rates is an attempt to stimulate the sluggish Chinese real estate market. In the first eight months of 2022, China’s real estate development investment fell 7.4 percent year-on-year, a decline of 1 percentage point over the previous month. On Oct. 18, the Bureau of Statistics was supposed to release September real estate sales and investment data, but it did not.
“The official data itself is not credible, but we can see the economic trend and direction that the CCP cannot hide in the data,” Ou Kai, a current affairs commentator living in Japan told The Epoch Times. The delay in releasing the data now is in fact an indication that China’s economic situation was very bad in the third quarter due to the COVID-19 prevention measures.
Grade A office buildings are new or rebuilt with high-specification renovations, that should be well-located, easily accessible, and professionally managed.
Katherine Jiang, a Hong Kong-based financial analyst with years of experience, told The Epoch Times: “The rise in office vacancy rates in Beijing and Shenzhen reflects the economic depression and the deterioration of the business environment under the harsh Zero-COVID policy. Businesses are either fleeing first-tier cities or can’t continue to operate.”
The Central Bank and Banking and Insurance Regulatory Commission co-issued a notice on Sept. 29 stating that local governments can decide on their own whether to lower housing loan interest rates by the end of this year.
On Sept. 30, China’s Central Bank announced that effective Oct. 1, the interest rate on the first set of individual housing fund loans would be adjusted downward by 0.15 percentage points, to 2.6 percent and 3.1 percent for those with mortgages of five years or less and more than five years, respectively. On the same day, the Ministry of Finance announced a personal income tax rebate for eligible home buyers and sellers.
“The Communist government hopes to boost the property market by lowering mortgage rates, but it’s hard to say whether the move will be enough to reshape confidence of the market,” said Jiang, adding that home buyers and investors are caught in a vicious circle in a depressed economy, and China’s housing market is saturated to the point of oversupply.
