Economics Research | Asia Ex-Japan
01 March 2013
First Insights: China: Another round of policy tightening in the property sector
The government announced today a set of new tightening policies in the property market, including: (1) imposing a 20% capital gain tax on property transactions; (2) the PBoC to raise the down payment requirement and mortgage rate in cities, where property prices have risen quickly; and (3) extending the "local resident" requirement to cities, where property prices have increased swiftly and (4) for cities with "local resident" requirements, such policies shall be implemented in a more restrictive way.
We believe the policies will lead to downside risks to property prices and investment, but the effectiveness of the policy depends on whether the money supply will be tightened as well. We expect monetary policy tightening to take place in the next several months, and will lead to GDP growth following a downward trend in 2013, dropping to 7.3% in H2 (consensus 8%). The announcement today reinforces our view.
Economists
Zhiwei Zhang
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