The central bank's 27-basis-point interest rate increase has had little
impact on home and stock prices in the short run, but rubbed salt into the
wounds of an already sluggish real estate industry.
"The rise will have little effect on home prices in general and people won't
suspend purchases because of it," said Pan Shiyi, chairman and co-president of
Pan Shiyi, chairman and co-president of SOHO China
Property stocks in general did not drop but instead climbed on the back of a
rise in the benchmark index of Shanghai and Shenzhen bourses.
But Wang Deyong, senior property stock analyst from CITIC Securities,
described the rate rise as "bad news" for the industry.
"Due to the sluggish situation in areas where the real estate companies
operate, the rise of property stocks can only last a short time," said Wang.
Wang said he believes several factors have already exacerbated the
difficulties of the real estate industry in China.
"We predicted the government will soon roll out a new round of macro control
measures to regulate this industry, and these measures are very likely to be
more intensive than those of last year," Wang said.
generally believed that the regulatory measures adopted by the central
government last year, which included tax, interest rate, mortgage as well as
land policy, did not achieve the expected results and failed to rein in the
rapid increase of housing prices across the nation.
In addition, two positive functions that the real estate industry can perform
- one in pushing forward social development and the other in propelling the
building of a prosperous society - did not figure at the recent session of the
National People's Congress though previously mentioned.
In view of this, Wang said, "We remind investors to maintain a cautious
attitude toward stocks in this particular sector since the whole industry is
still in the doldrums."
Starting with the interest rate hike, Wang holds, other
macro control measures will follow soon. "These policies are serious tests for
the industry," Wang said.
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