Local authorities of four major Chinese cities have erected barriers over the past week to prevent an unprecedented flood of cheap money unleashed by the central bank from buoying prices in the RMB 17.4 trillion ($2.7 trillion) housing market, reported the South China Morning Post.
Shanghai, the country’s commercial hub, kicked off the market-cooling policies last Friday, limiting the amount of money homebuyers can borrow for buying real estate. That was followed within days by housing authorities of Shenzhen, Hangzhou and Guangzhou, which together make up some of the biggest and most affluent population centers outside the Chinese capital.
The flurry of “measures in key cities is a very clear signal that the central government is pulling out all stops to cool the enthusiasm of buying homes, and prevent the market from overheating,” said Lung Siu-fung, a property analyst at CCB International Securities.
The value of China’s home sales defied the coronavirus pandemic and rose 8.7% last year, with the average price soaring for 33 consecutive months, both records since the National Bureau of Statistics began releasing monthly data in 1991. Such lofty heights are raising concerns among policymakers during a period of economic vulnerability, amid a slower growth pace and wobbly job prospects during the coronavirus pandemic, reported the SCMP.