Real Estate Policy Still Tightening

Beijing is closing the divorce loophole.

SCMP: Beijing imposes fresh home purchase restrictions to close the ‘divorce’ loophole

The move is only the latest in an unending string of tightening policies across the country. Meanwhile, economists and officials turn their focus to monetary and credit policies.

iFeng: 楼市调控再次升级 严控信贷资金过度流向房地产
In response to rising house prices, Industrial Bank chief economist Lu Zhengwei in an interview with the people's financial, said the rapid growth of money and credit is one of the important reasons leading to high prices. Real estate needs include residential demand and speculative demand. Residential demand reflects the commodity properties of commercial housing, speculative demand reflects the financial properties of commercial housing. When the speculative demand is greater than the residential demand, commercial housing use of its strong value-added financial attributes, has become the most important asset pool to absorb the currency.

National Development and Reform Commission Director He Lifeng also in China Development Forum said that at present, a large number of funds into the real estate market, once led the first-tier cities and hot second-tier cities in the housing prices rose too fast, further pushing up the cost of real economic development. To solve the imbalance between the real estate and the real economy, we should strengthen the land reform through sound monetary policy, speed up the supervision and coordination mechanism, and properly handle the non - performing assets to ensure that there is no systemic risk.

He Lifeng believes that the need to control the excessive flow of credit funds to the real estate industry, increase the intensity of policy interpretation and information dissemination, strengthen the communication of market players, enhance policy transparency, to the community to release a positive signal to guide all aspects of the future development of a good enhancement Market confidence.

..."Real estate is a highly leveraged activity in the sharp rise in real estate prices to give special attention, our top priority is to control the lever, the lever to control at a suitable level, to improve the down payment is the most direct action to reduce the lever. "Lu Zhengwei said.
Rising home prices are a symptom of loose monetary policy.

Flashback to 2016.

FT: Is there a new Plaza Accord?
Foreign exchange traders are buzzing with talk of a new “Plaza Accord”, following the marked change in the behaviour of the major currencies after the Shanghai G20 meetings in late February.

Since then, the dollar has weakened, just as it did after the Plaza meetings on 22 September 1985. The Chinese renminbi has been falling against its basket, in direct contrast with the “stable basket” exchange rate policy that was publicly emphasised by PBOC Governor Zhou just before Shanghai. The euro and, especially, the yen have strengthened, in defiance of monetary policy easing by the ECB and the Bank of Japan.
Marketwatch: Did central bankers make a secret deal to drive markets? This rumor says yes
Rumors are flourishing that global policy makers made a secret deal at the G-20 meeting in Shanghai late last month. This “Shanghai Accord” to weaken the greenback was aimed at calming the financial markets, which had gotten off to an awful start to the new year, according to the chatter.
The rebound in commodities and Chinese home prices were all a result of China's accelerated credit growth.

Now they are doing the cleanup. As before, real estate proves stubborn and policy tightening looks increasingly likely to overshoot.

Marketwatch: China money market jittery as PBOC cash dries up
Borrowers and lenders remain edgy after the Chinese central bank held off injecting cash into markets for the second day in a row, ending a three-day streak of pump priming this week. As a result, short-term funding costs remain close to levels unseen in more than two years, testament to Beijing's resolve to reduce its economy's unhealthy reliance on cheap credit and ballooning debt.

"What the central bank is doing is a proactive choice, which sends a clear message to markets that they aren't getting what they want," said Ding Shuang, an economist with Standard Chartered in Hong Kong.
The pumping was a response to the return of the cash crunch, the symptom of tight (for China) monetary policy.

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