The Politburo meeting set the tone for the virtuous development of the real estate industry. Will the central bank's RRR cut benefit the property market?


2021-12-06: [Article Link]  Every journalist: Wu Jofan, every editor: Wei, while supporting real economic development and promoting a steady reduction in the cost of integrated financing, the Central Bank decided to lower the deposit reserve rate for financial institutions by 0.5 percentage points on December 15, 2021 (excluding those that have already implemented the 5% deposit reserve rate), releasing a total of about $1.2 trillion in long-term funds. The chief market analyst of the Shell Institute said to Daily Economic News that the meeting of the Bureau of Political Affairs had proposed “support to commodity housing markets to better meet the legitimate housing needs of home buyers.” Moreover, the term “promotion of a virtuous circle of real estate” was first proposed, based on the judgement and considerations of the current situation in the real estate sector, to set clear goals for the development of the real estate sector next year. “The conference explicitly supported the commodity housing market to better meet the legitimate housing needs of buyers and to promote healthy development and virtuous cycles in the real estate sector. With respect to the future direction of real estate credit policy, Creser argues that residential mortgage lending is expected to continue to be unbundled, mainly through an increase in the amount of personal mortgage loans, a reduction in the loan cycle, and a reduction in interest rates on mortgages. In particular, on 21 October, the Bank's supervision conference further released positive signals about the future credit environment or the prospect of improvement, as well as an explicit guarantee of the need for immediate credit. On 19 November, the Central Bank issued its Report on the Implementation of China's Monetary Policy in the Third Quarter of 2021, proposing a sound monetary policy that is flexible and reasonably proportionate, and that improves the monetary supply-resortting mechanism, while maintaining reasonable liquidity and enhancing stability in overall credit growth. The central bank’s cut-off rate of 0.5 percentage points on 15 December, which is expected to release $1.2 trillion, partially returning the medium-term loan facility that is due to expire (an MLF of $950 billion will expire on 15 this month), and the remainder to meet the needs of market players. Creary argues that the central bank’s reduction is based mainly on three considerations: first, keeping liquidity reasonably adequate and easing downward pressure on the economy. However, as far as the real-estate market is concerned, Creser argues that the drop in demand and purchasing power are not equivalent to a bailout, and that the real-estate market may be warming at the end of the year, with prospects for a steady recovery. “In the period of lower-economy pressure, bank lending has been weak, and risk-prevention awareness has increased.


Note: This is a translated version of the Chinese news media article. A mature and nuanced reading is suggested.



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The Politburo meeting set the tone for the virtuous development of the real estate industry. Will the central bank's RRR cut benefit the property market?


2021-12-06: [Article Link]  Every journalist: Wu Jofan, every editor: Wei, while supporting real economic development and promoting a steady reduction in the cost of integrated financing, the Central Bank decided to lower the deposit reserve rate for financial institutions by 0.5 percentage points on December 15, 2021 (excluding those that have already implemented the 5% deposit reserve rate), releasing a total of about $1.2 trillion in long-term funds. The chief market analyst of the Shell Institute said to Daily Economic News that the meeting of the Bureau of Political Affairs had proposed “support to commodity housing markets to better meet the legitimate housing needs of home buyers.” Moreover, the term “promotion of a virtuous circle of real estate” was first proposed, based on the judgement and considerations of the current situation in the real estate sector, to set clear goals for the development of the real estate sector next year. “The conference explicitly supported the commodity housing market to better meet the legitimate housing needs of buyers and to promote healthy development and virtuous cycles in the real estate sector. With respect to the future direction of real estate credit policy, Creser argues that residential mortgage lending is expected to continue to be unbundled, mainly through an increase in the amount of personal mortgage loans, a reduction in the loan cycle, and a reduction in interest rates on mortgages. In particular, on 21 October, the Bank's supervision conference further released positive signals about the future credit environment or the prospect of improvement, as well as an explicit guarantee of the need for immediate credit. On 19 November, the Central Bank issued its Report on the Implementation of China's Monetary Policy in the Third Quarter of 2021, proposing a sound monetary policy that is flexible and reasonably proportionate, and that improves the monetary supply-resortting mechanism, while maintaining reasonable liquidity and enhancing stability in overall credit growth. The central bank’s cut-off rate of 0.5 percentage points on 15 December, which is expected to release $1.2 trillion, partially returning the medium-term loan facility that is due to expire (an MLF of $950 billion will expire on 15 this month), and the remainder to meet the needs of market players. Creary argues that the central bank’s reduction is based mainly on three considerations: first, keeping liquidity reasonably adequate and easing downward pressure on the economy. However, as far as the real-estate market is concerned, Creser argues that the drop in demand and purchasing power are not equivalent to a bailout, and that the real-estate market may be warming at the end of the year, with prospects for a steady recovery. “In the period of lower-economy pressure, bank lending has been weak, and risk-prevention awareness has increased.

Note: This is a translated version of the Chinese news media article. A mature and nuanced reading is suggested.

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