PBOC steps to help property market

Amid pervasive pessimism among foreign institutions toward China's property market, finally there is a voice of cautious optimism.

Barclays Capital said in its latest report that People's Bank of China's recent guidelines for banks will support home sales. This, in turn, should help to sustain investment and construction activity.

The PBOC last week had urged banks to prioritize housing loan demand to support the market.

"This easing in loan quotas and lower mortgage rates, if implemented,should effectively boost homebuyer sentiment… which supports our base case of a gradual deflating of China's property bubble in 2014-15, and our 7.2 percent GDP growth forecast," the report said.

"Our property team also believes that real housing demand is not as bad as suggested by official year-to-date sales, given the prevailing wait-and-see mode among homebuyers. The team thinks a degree of price compromise by developers could trigger the release of pent-up demand," it added.

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