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China’s Ministry of Housing and Urban-Rural Development’s statement last week paved way for nationwide LTV (Loan-to-value ratio) loosening, with tier-one cities expected to be the biggest beneficiaries and other relaxation may come if proposed initiatives fail to shore up demand, Jefferies said in a research note.
The authority’s policy shift to “optimizing housing policies in the new supply-demand dynamic to support rigid and improvement-based housing demand” indicates that authority will be more supportive and the directions of policy easing include relaxing rules for recognizing eligibility of first-time home buyers, lowering down payment ratio and mortgage rates for first-time home buyers and reducing tax for buyers to improve housing condions, it said.Â
During the weekend, China’s three tier-one cities – Beijing, Shenzhen and Guangzhou – echoed the positive policy tone of the Politburo meeting and demand-side measures will arrive earlier and stronger than initially anticipated, the broker said.
Jefferies is bullish on the market and the real estate sector in the next 3 – 6 months, but considering the lagging impact on the physical market, some investors may sell their stocks first when city-level policies start to be rolled out, it said.
Jefferies favored China Resources Land and China Overseas Land & Investmentu, which are expected to benefit from the sales recovery in view of their abundant resources available for sales in tier one and two cities.Â