Property to remain a drag despite looser mortgage controls

Those hoping that a loosening of mortgage controls, announced by the People’s Bank yesterday, will set the stage for a recovery in the property sector are likely to be disappointed. Relatively tight liquidity conditions, as a result of official efforts to tackle credit risks, mean that banks have limited scope to boost mortgage lending. Moreover, even if the move does help support property sales, that is unlikely to translate into a marked recovery in construction activity given the scale of the existing overhang of unsold property.