BIZCHINA / Biz Who
Rate rise a bad news for real estate sector
By Zhang Yu (China Daily)
Updated: 2007-03-20 09:18
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.
Pan Shiyi, chairman and co-president of SOHO China
"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 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.
Related readings:
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It's 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.
(For more biz stories, please visit Industry Updates)
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