JPMorgan Econ FI-China housing The time inconsistency issues persist LPR cut...-109867124(1)

AsiaPacificEconomicResearch15August2024JPMORGANwww.jpmorganmarkets.comEmergingMarketsAsia,EconomicandPolicyResearchTingtingGe(852)2800-0143tingting.ge@jpmorgan.comHaibinZhu(852)2800-7039haibin.zhu@jpmorgan.comGraceNg(852)2800-7002grace.h.ng@jpmorgan.comJiYan(852)2800-7673ji.yan@jpmorgan.comJPMorganChaseBank,N.A.,HongKongBranchChina’shousingstrategycontinuesitsgradualistapproach...China’sgoalofcurbingrealestateasakeygrowthdriverandraisinghousingaffordabilitycanbeunderscoredbytheCPC’snewobjectivesofdeliveringbothhigherqualitygrowthandcommonprosperity.Althoughthehousingmarketisundergoingitsmostseveredownturninthreedecades,thepolicyadjustmenthasbeencontinuingthegradualistapproach.Thelatestmoveisa10bpreductionforthe5-yearLPRinJulyfollowingthe7-dayreversereporatecut.WhilethePBOChasremovedfloorsformortgagerates(previouslyLPR-20bpsforfirsthomeandLPR+20bpsforsecondhome),theLPRcutsuggestsroomtofurtherlowermortgagerates.However,theimpactofincreasinghousingaffordability(e.g.lowingmonthlyrepaymentbyaround1%for1mnyuanmortgagewith30yeartenure)andliftinghomesaleswillberelativelylimited.IntheJulyPolitburomeeting,thenarrativearoundhousingpolicyguidelinesremainslargelyunchanged,reiteratingtosupportde-stockingofhousinginventory,ensurehomedelivery,andacceleratetheformationofanewhousingmarketmodel.Butnoconcretepolicyactionplanw...