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PBOC interest rate cut seen halting home sales slide as sentiment turns

Cut is equivalent to 2.5% reduction on a 1m yuan apartment

Published Wed, Nov 26, 2014 · 09:50 PM

Beijing

CHINA'S first interest rate cut since 2012 is set to halt a slide in property sales, reducing developers' stock of unsold homes that has weighed on prices. The central bank's surprise reduction in its benchmark rate on Nov 21 adds to discounts of as much as 12 per cent on mortgages that banks are already offering to first-home buyers, according to SouFun Holdings Ltd.

China's home sales and prices have declined this year, after four years of property curbs to stem speculation. Sales slumped 10 per cent in the first 10 months from a year earlier, and prices fell in all but one of the 70 cities tracked by the government in the past two months.

The rate cut "is a strong catalyst for the China property sector", said Johnson Hu, Hong Kong-based property analyst at CIMB Securities Research. "Home buyers may see it as a signal of property market stabilisation, lifting sentiment and thus boostin…

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