Drive to cool China property boosted
Although all banks in China are to varying degrees owned by the state, some have been chafing under the government’s property restrictions and have used loopholes to evade them. For example, banks are obliged to demand at least 30 per cent downpayments on mortgages, but some branches have offered generous overdraft facilities to help borrowers get around that.
BTW, the banks were declared secure enough to withstand a 50% drop in prices. Leads one to wonder if they included these little tricks in the analysis. Of course an overdraft facility is probably unsecured. That's better, right?
Based on total investment numbers, house prices in 2nd and 3rd tier cities are more than making up for the small declines in the first tier.
More Chinese cities see property prices fall as result of cooling policies
According to data released by the NBS last Wednesday, real estate investment grew by one-third to reach 2.63 trillion yuan during the first six months of the year.
Despite three interest rate hikes this year, developers have continued to invest in the real estate market, secured by the handsome profits they have raked in from previous sales.
Facing harsh restrictive purchase policies in larger cities, developers have shifted their focus to the country's second- and third-tier cities.
Non-first-tier cities saw their prices increase the most last month, with growth rates between 1.78 percent and 2.72 percent, according to NBS data.