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Real estate stocks dropped on Friday, despite the biggest overall climb in the stock market of the past week. China Vanke Co Ltd, the biggest property developer in Shenzhen, slipped 0.5 percent, to 5.94 yuan (74.25 US cents). While The fall follows speculation that commercial banks will take further steps to curb the growth in lending and increase mortgage down payments, following a banking regulator's statement on Wednesday. However, experts doubt the changes will have much effect because banks still face growing pressure to generate profits. It is widely believed banks will attempt to limit lending as well as increasing down payments for mortgages on expensive homes and investment properties, after the China Banking Regulatory Commission (CBRC) called for tighter controls earlier this week. But analysts were unsure whether such a move would meet the government's goal of cooling the overheated property market, as banks are still under great pressure to lend money due to excessive liquidity in the money market. "Commercial banks will soon issue tighter lending policies, but in fact they are reluctant to do so and therefore will only meet CBRC's lowest requirements." Yi Xianrong, an economist with the Wang Deyong, an analyst with CITIC Securities, said it was still too early to talk about the effect of CBRC's statement. "Unless commercial banks produce related policies, the effect on the property market will be negligible." Wang said. "But commercial banks will do anything they can to lessen the pressure from the banking regulator." Wang believes that even though commercial banks may increase down payments for mortgages on expensive homes, it will not have a major impact on people buying expensive properties because statistics show that rich people seldom need a mortgage to buy a house." "In fact, to increase the down payments will have more impact on poor people and low-ended houses," Wang pointed out. Shanghai analysts say the regulator's statement may have little immediate impact on the city's property market, which has already adjusted substantially since June. "The short term impact of the statement will be limited," said Zhang Xiaolong, analyst with Colliers International ( Housing prices in the city fell between June and February, after more than doubling since 1999. The property transaction volume also shrank during the period, with outstanding individual mortgages in local banks declining since June, according to the Meanwhile, housing prices in 70 other large and medium Chinese cities rose 5.6 percent last month from a year earlier, while "Local banks have already tightened property loans to individuals and developers since last March, "said Huang Weiwei, a real estate analyst with the Shanghai-based Anjia website. Earlier this month, CBRC's According to the bureau's statistics, the non-performing loan ratio has risen to 0.68 percent, compared with 0.58 percent at the beginning of the year. The bureau also said outstanding mortgages with local banks have been climbing since March. Presently, mortgage loans account for about one-third of total outstanding loans in Liao Liguo, board member of Guangzhou Longchang Real Estate Development Co Ltd, said the CBRC's statement, if implemented literally, will primarily challenge small developers and frustrate people borrowing money to buy houses as an investment. (
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