China Paint Network
is still in the 10th lunar month, the central bank unexpectedly to the country's housing enterprises sent a "big red envelope." On February 28th the Bank of Chinese said it would cut the benchmark interest rate on rmb loans and deposits from financial institutions as of March 1, 2015. The benchmark one-year lending rate for financial institutions was cut by 0.25 percentage points to 5.35 per cent and the benchmark one-year deposit rate by 0.25 percentage points to 2.5 per cent. The central bank also said it would adjust the upper limit of the floating range of deposit rates for financial institutions from 1.2 times the deposit benchmark rate to 1.3 times, and adjust the benchmark interest rates for deposits and loans and the interest rates for personal housing provident fund deposits and loans accordingly, in conjunction with the promotion of market-oriented reform of interest rates. Why such a sudden interest rate cut, the central bank officials pointed out that in recent months, consumer price increases have fallen, industrial prices have expanded, the level of real interest rates to form a boost. The current price increase is at an all-time low, providing room for the proper use of interest rate instruments. To be clear, China's economy is deflationary, and cutting interest rates can stimulate consumption and stabilize the economy. Some experts said the central bank cut interest rates to boost China's economy, to help financial institutions adjust the structure, increase support for small micro-enterprises, "three rural" and major water conservancy projects. In fact, real estate companies are also cheering the rate cut, which seems to be the best for the industry to bear the burden of a year. Analysts pointed out that from the supply side, after the interest rate cut, is conducive to reducing the burden of real estate developers interest rates, from the demand side, the interest rate cut is conducive to reducing the burden of people to buy real estate, is conducive to mobilizing the need to buy a house. Indeed, by the end of 2014, real estate inventories in many of China's second-tier cities had reached alarming figures. As of December 7, 2014, for example, the total number of commercial housing units available for sale in Beijing again exceeded 90,000 units, reaching a 32-month high, and by the end of last year, the inventory of new homes in Nanjing's property market was nearly 57,000 units, a new record in three years. Also, as of January 31, 2015, 154,222 new commercial housing units could be sold in downtown Hangzhou, a record high. And that's just some of the microcosms of most of China's property-hot cities. In the two-day hot documentary "Under the Dome", Chai Jing obtained such a set of data, in recent years, the urbanization of third- and fourth-tier cities, for China's planned population capacity of 3.4 billion. At the end of 2014, the number of people living Chinese mainland was 1.36 billion, according to the Bureau of Statistics. In such a reality, it is logical to mobilize consumer demand and stimulate the desire to buy a house. But will the results be as smooth as expected? In the view of some economists, the general trend of real estate decline has been doomed, interest rate cuts are difficult to reverse the situation. Some analysts believe that the central bank cut interest rates may indeed make home buyers lower borrowing costs, will increase some purchasing power. But the relationship between supply and demand has not fundamentally improved, the existence of limited purchase, housing prices do not rise, will still let investment-type demand into a wait-and-see state. The transition from the golden age of real estate to the silver age is still a big trend, not easy to change. Ba Shusong, deputy director of the Institute of Finance at the Development Research Center of the State Council, said in a public meeting that although the central bank cut interest rates to reduce the monthly supply burden of home buyers and the financing costs of developers, but the real estate sales inflection point has arrived, the trend of housing market adjustment can not be changed.