DB-中国宏观策略报告-开发商的政策风险在加强 09.26

26 September 2007 6页

China Macro Strategy

Policy risks for developers to intensify

Given the recent acceleration in property price inflation (officially rising to 8.2%yoy
in August; unofficially significantly higher in major cities) and the policy lessons
learnt from the US subprime crisis, we believe that the Chinese government will
begin to taken more concrete steps to rein in speculative demand, slow property
inflation, and increase the supply of public housing. Today, local press reported
that regulators (PBOC and CBRC) may raise the minimum mortgage downpayment
ratios (e.g., to 40% from the current 30%) and mortgage lending rates
for second home buyers. We think these policy actions are likely, and may be
taken in the very near term.
The minimum down-payment ratios have been raised by several banks' local
branches recently, but a nationwide implementation of this policy should have
broader impact on demand. An increase in mortgage lending rates will be an
unexpected move, and could be more powerful than the down-payment ratio
policy change as a mortgage rate hike affects all second home buyers, not just
those who intend to borrow up to 70% of the value of the properties. While the
market may be concerned about the ability of banks to implement these policy
changes (e.g., how to identify second home buyers if they borrow from different
banks and using names of different family members), we believe that policy
makers will have specific arrangements to address possible loopholes. That is, for
all second home buyers, as long as they are borrowing from banks (any banks),
they should be impacted by these policy changes.