China announces measures to support the property sector - Nomura

FXStreet (Bali) - Nomura Economics Team expects the pace of property market correction in China to stabilise in H2 after measures to support the property sector were announced by authorities this week.

Key Quotes

"The authorities have announced measures to support the property sector today. The loan-to-value (LTV) ratio has been eased for second-home purchases, with the maximum ratio raised to 60% from the previous 30%, according to a circular jointly issued by the People’s Bank of China, the Ministry of Housing and Urban-Rural Development, and the China Banking Regulatory Commission."

"Moreover, the Ministry of Finance also adjusted the property holding period (from five years to two years) in the 5.5% business tax imposed on properties re-sales by households:"

"These measures are another significant move for the property market following the mortgage policy easing in last September. This move is largely consistent with our longstanding view that the property sector is the major drag for growth and policy needs to be loosened to avoid any sharp correction in the sector."

"Overall, we believe this is positive for the sector and we now see the pace of property market correction stabilising in H2, with sales and investment growth becoming stable on a year-on-year basis. More specifically."