Nomura: Property Easing Measures Are Not Enough To Deliver A Real Recovery

Nomura note that the stepped-up easing measures surrounding the Chinese property market “are in line with our expectations. These measures may provide a brief respite to housing markets, especially in large cities.”

• “As mortgage borrowers can save an estimated CNY200-300bn per year, there might also some boost to consumption.”
• “However, the impact could be small and short-lived, as other restrictions on home transactions and land supply remain in place in large cities, while contracting exports, geopolitical tensions and weak confidence in the private sector may continue to weigh on the economy in general and sentiment of potential home buyers in particular.”
• “Moreover, we are still concerned that improved home sales in large cities may drain demand in low-tier cities and provide little help to reduce default risks among major private developers, which tend to have large exposure in low-tier cities.”
• “In our view, though these easing measures are very welcome, they are definitely not enough to turn things fully around. Beijing may have to introduce more aggressive property easing measures to deliver a real recovery.”