Across The Border | Regulators begin the delicate task of cooling, but not stalling or crashing, China’s sizzling property market
21 cities have introduced fresh home-buying curbs, after prices nationally increased at their fastest pace in six years in August, and continue rising
The Chinese authorities are taking a top-down approach to deflating the bubbles now appearing all over the property market, but the regulators are well aware that one wrong move could cause a price crash, similar to what ignited last year’s stock market rout.
“The speed of leverage build-up has been faster than expected and it’s getting into risky territory,” says David Cui, a strategist with Bank of America Merrill Lynch.
“How to manage a soft landing without sparking a hard crash in the property market is becoming a tough balancing act.
“In last summer’s equity rout the real leverage was hard to assess, and the market crashed when the regulator started to tighten shadow margin lending.”
China’s financial regulators, including the People’s Bank of China, the China Banking Regulatory Commission and the China Securities Regulatory Commission (CSRC) are planning a joint crackdown on speculative funds flowing into the property market in violation of current rules, Bloomberg quoted an unnamed source on Tuesday morning.
How to manage a soft landing without sparking a hard crash in the property market is becoming a tough balancing act
“It is hard to define which funds are speculative and which are not,” he said.
