Despite being downplayed by some, a 0.25 percent increase in interest rates will play an inestimable influence on the real estate market. It will not only increase speculation costs in this sector, it will also change investor expectations of the future market. Any fundamental changes in investor expectations will change the trend of China’s speculation-prone real estate sector.
More importantly, the latest rate hike is expected to produce an accumulated effect on the domestic real estate market, one that heavily depends on credit. For a real estate market in which the down payment practice is widely applied, any rate hikes will increase the cost of borrowing and thus deter some from entering the market.” Read more.
“Central Bank Targets Inflation”
Xinhua News, December 27, 2010.
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