Effectiveness of mainland housing policy easing hinges on banks

Sentiment has improved in the mainland's housing market after a policy relaxation last week, but much depends on whether the banks embrace the spirit of Beijing's move and free up lending.

Amid recent deteriorating economic indicators, the central bank unveiled a slew of measures to support home purchases and reopen financing channels for cash-strained developers, in the first such policy easing since 2010. The property market is a major growth engine for the broader mainland economy.

Some families hastened their home purchases, worrying that prices would soon start to rise again, and some developers stopped offering discounts, the South China Morning Post found during visits to five projects in a booming suburban area of Beijing before and after the policy announcement last Tuesday.

"I'm one of the end-users and will have to buy [a home] if the price looks OK," said a man in his 40s who declined to be named.

He decided not to hesitate any longer and signed a contract with China Vanke, the mainland's biggest developer by sales, for a unit at the Fun City project in Changyang, Fangshan district. The development is about an hour by subway from the capital's nearest central business district.

A three-bedroom home of about 138 square metres in the mega project cost about 3.7 million yuan (HK$4.8 million). The average price has suffered this year in a nationwide market downturn, but is now moving towards the previous record of almost 30,000 yuan per square metre hit last year.

One stop farther away from the city centre, Vanke is selling two other projects, competing with rivals including Beijing Capital Land and KWG Property. Together, they are building a new town almost from scratch, adding schools, shopping malls, office buildings and even hotels.