(Economic Watch) Will the property market recover quickly after China's central bank cuts RRR across the board?
China News Agency, Beijing, April 15th, Question: Will China's central bank cut the real estate market quickly?
China News Agency reporter Pang Wuji
On the 15th, the news of a comprehensive RRR reduction came to fruition.
The People's Bank of China decided to cut the deposit reserve ratio of financial institutions by 0.25 percentage points on April 25 (excluding financial institutions that have implemented a 5% deposit reserve ratio), releasing about 530 billion yuan of long-term funds.
With ample liquidity, will the property market pick up quickly?
RRR cuts are not aimed at the property market
The RRR cut to release liquidity will bring about easing of overall funds, but this measure is not intended to boost the property market.
Li Yujia, chief researcher of the Guangdong Housing Policy Research Center, said that the purpose of the RRR cut is to further increase financial support for the real economy, especially industries severely affected by the epidemic, as well as small, medium and micro enterprises and individual industrial and commercial households, and make reasonable profits to the real economy. Financing costs.
He pointed out that due to the surge in international crude oil, wheat and other commodity prices in March, the imported inflation pressure has increased, and the real interest rate faced by the real economy has accelerated upwards, which may have a significant tightening effect on aggregate demand.
The RRR cut can help small, medium and micro enterprises reduce financing and operating costs.
Zhang Dawei, chief analyst of Centaline Real Estate, also believes that following the RRR cuts in July and December last year, China’s launch of the RRR cut tool again sends a clear signal to the market that finance continues to increase its efforts to support stable growth.
The long-term funds released by this RRR cut will not only help reduce the capital cost of financial institutions, thereby guiding the reduction of financing costs of the real economy, but also help banks and other institutions to have sufficient funds to allocate treasury bonds, local government special bonds, etc. Forward force.
Property market expected to improve
Although it is not aimed at the real estate market, the RRR cut is still an important benefit for the current real estate market.
Chen Wenjing, market research director of the Index Division of the China Index Research Institute, pointed out that, on the one hand, the RRR cut is conducive to increasing the liquidity of market capital, and the reasonable capital needs of home buyers and enterprises are expected to be better supported, which is beneficial to the real estate market; on the other hand, The current macro policy efforts will also have a positive effect on stabilizing market expectations.
Li Yujia also believes that the RRR cut will further increase the willingness of banks to reduce the loan market quoted rate (LPR) plus level.
China's personal housing loan interest rate is based on the 5-year LPR as the pricing benchmark.
On the basis of the policy of not being lower than the lower limit stipulated by the state, the LPR addition level can be adjusted according to the actual situation in different places.
As of March, interest rates on first and second homes in major Chinese cities have been declining for six consecutive months.
Li Yujia pointed out that due to the narrowing of interest rate spreads, the enthusiasm of banks to further reduce the points has decreased.
This RRR cut frees up no-cost funds, which is conducive to encouraging banks to further reduce mortgage rates.
At present, the first home is LPR+70 basis points. From the perspective of promoting reasonable demand, combined with the reality of high housing prices and weaker expectations of residents, there is still room for decline.
In addition, the RRR cut may further increase the supply of housing loans and promote housing consumption.
The property market is hard to rebound quickly
Industry insiders believe that the direct boost to the property market cannot be overestimated.
Chen Wenjing believes that the current real estate market is still in the stage of deep adjustment, the confidence of home buyers has not been significantly restored, and the circulation of various chains in the real estate industry is still not smooth.
Official data show that in March, the average month-on-month price of new homes in 70 large and medium-sized cities was still in the downward range.
Among the 70 cities, the price of new houses in more than half of the cities was in the range of month-on-month decline.
Xu Xiaole, chief market analyst of the Shell Research Institute, also said that overall, the month-on-month increase in housing prices in first-tier cities narrowed in March, while second- and third-tier cities were still down month-on-month, indicating that market repairs were not strong, and the fundamental reason was weak market expectations.
Analyzing the reasons, Xu Xiaole believes that on the one hand, the current repeated epidemics and geopolitical conflicts have brought more uncertainty to domestic economic growth, and the reduction in residents' expected income has led to a decrease in residents' risk appetite; on the other hand, although the transaction volume of second-hand housing has improved, It is still at a historically low level, the sales of the new housing market have not improved significantly, and the liquidity risk of housing companies has not been effectively alleviated, which aggravates the market's wait-and-see sentiment.
Looking forward to the market outlook, Xu Xiaole believes that the external environment such as the epidemic will prolong the market recovery process, but with the support of policies such as RRR cuts, the general trend of property market recovery will not change.
Chen Wenjing also said that under the continuous improvement of the credit environment and control policies, the expectations and confidence of home buyers are expected to gradually stabilize, but the pace of market recovery still depends on the epidemic situation and the strength of policies.
(Finish)