Mixed Reports on the Housing Market

Tianjin and Beijing see little effect from new policies since the 30% discount now allowed by the central bank will be almost impossible to obtain because it is up to individual banks to make the discounted loans. Source: Sina 京津多个楼盘未现新政利好 7折利率难大范围推广

In the post yesterday (China Golden October 2014 Update: Sales, Optimism Up), I finished with a discussion of psychology. This article shows how fast psychology has turned in some corners: some developers are now remiss about not taking the opportunity to buy land in the prior three quarters, when prices were depressed. It is now expected that prices will rise in the fourth quarter and larger developers will muscle out small and medium developers who are still facing financing issues. Supposed inside documents from some developers which show plans to raise prices on October 8 or October 10, after the holiday, are attracting some attention. There's a dispute over whether the documents are legit, or a ruse to drive sales during the holiday period. There's a big difference in confidence between those two possibilities. Source: Sina 松贷后二线楼市速暖:开发商频玩涨价后悔地买少了

A more measured take expects the market to reach a turning point by late October, once the new credit policies start taking effect. Sales were better than expected during the National Holiday though, and probably even better than current data shows due to lags in the official government sales data. Source: QQ Finance 楼市信贷新政力度超市场预期 房企放风要涨价

The most stunning item is the report on the smaller developers who after one week of a policy change that has barely even been implemented and may never be implemented by banks, think the market has turned and regret not buying more land this year. It seems hope never really died and that if the government did force through a credit increase, the bubble would quickly reinflate. This also may mean many small developers still have not accepted reality and are trying to hang on in this market, probably by means of very expensive and risky private loans.

My overall take is that there's some signs of optimism, but the developers are like a starving man being fed a few crumbs. Sentiment was so negative and here's a glimmer of hope from the central bank.......but commercial banks probably won't risk their balance sheets on a weakening real estate market. If I'm right, reality will set in by the end of October.

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