takes hold, Chengdu is an exception. By several metrics, including house prices and sales of new homes, it is faring better than almost anywhere in the country. At a national level, the central government’s response to the deepening property crisis, including an interest-rate cut announced on June 13th, has underwhelmed. China’s benchmark stock index has fallen by 8% since peaking this year in early May, when the country still appeared to be rocketing towards a full.
What explains this success? Since 2016 officials in every Chinese city have been able to devise their own measures for cooling or heating local property markets. Most of the rules employed are restrictions on who can buy a flat, how many they may purchase and the size of the downpayment required. In most large cities, only people with local, or residence permits, are allowed to buy homes. In Chengdu, high-level purchase controls remain in place.
Chengdu’s officials also did a better job of tackling the crisis of confidence that spread across the country last year. As developers went bust, many failed to finish flats. Thousands of homebuyers responded by halting mortgage payments. Many more delayed buying new homes. Officials in Chengdu went to great lengths to ensure homes were handed over, funnelling cash to developers, says Ms Chow. Even defaulting developers managed to complete homes.
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