Chinese regulators ease some real estate controls

Regulators aren’t ready to pull back entirely and are keeping a close eye on the market

National Weekend Edition /
Nov.November 27, 2021 10:30 AM
Chinese President Xi Jinping (Getty)

Chinese President Xi Jinping (Getty)

Chinese regulators are easing some restrictions on bond sales by real estate firms and developers, though they aren’t pulling back entirely.

The goal: limit credit to overleveraged borrowers without cutting off loans entirely, the Financial Times reported, citing Zou Lan, head of financial markets at the People’s Bank of China.

“We have instructed major banks to keep real estate loan issuance steady and orderly,” Zou said.
Chinese developers have borrowed so much money in the last few years that regulators worry that a credit crisis could drag down the economy as a whole.. By some estimates, a third of all economic activity in China is related to real estate, the FT said.
In January, the People’s Bank of China began limiting loans to developers and homebuyers.

But the government has focused mostly on reeling in developers. In August, the government forbade private equity funds from investing in residential development, cutting off a major source of cash.
Evergrande has been the poster child for the property sector’s debt crisis. Many believe the government will allow it to go bankrupt. Other companies are also facing liquidity issues.

The mortgage lending market has also opened up. Lending increased 1 percent year-over-year last month, the first gain in four months. The time to review a mortgage has also halved to less than three months from about six months in September.

Buyers are holding back, however, as prices sank in recent months and buyers expect them to fall further. That could be a challenge for developers.
Either way, regulators aren’t ready to go hands off just yet, one Beijing-based policy advisor said.

“All of our previous attempts to regulate the real estate market have failed because we exited halfway through overhauls,” the advisor said. “This time, the central government is determined to stick to the plan.”

[FT] — Dennis Lynch 





    Related Articles

    arrow_forward_ios
    1200 Silo Ln, York, NE 68467 (Redfin, iStock)
    Missile silo converted into apocalypse-ready home asking $550K
    Missile silo converted into apocalypse-ready home asking $550K
    Elvis Presley and his childhood home in Tupelo, MI
    Don’t be cruel: Elvis childhood home back on auction block
    Don’t be cruel: Elvis childhood home back on auction block
    Passage Island (Fay Ranches, iStock)
    Private Alaskan island that expands at low tide to ask $20M
    Private Alaskan island that expands at low tide to ask $20M
    A photo illustration of No. 15 Shouson Hill Road West in Hong Kong (Emperor International Holdings Limited, iStock)
    Hong Kong’s priciest 2022 home fetches $111M
    Hong Kong’s priciest 2022 home fetches $111M
    116 East 65th Street and Ghislaine Maxwell (Zillow, iStock)
    Investor Frederick Rudd sells Ghislaine Maxwell’s former UES townhouse
    Investor Frederick Rudd sells Ghislaine Maxwell’s former UES townhouse
    HomeLight CEO Drew Uher (HomeLight, iStock)
    HomeLight lays off a fifth of its workers, weeks after raising $60M
    HomeLight lays off a fifth of its workers, weeks after raising $60M
    Berkshire Hathaway HomeServices' Steven James (right) and Brad Loe (BHHS, iStock)
    Berkshire Hathaway HomeServices wants to be a New York contender
    Berkshire Hathaway HomeServices wants to be a New York contender
    Amy Schumer and 19 Cranberry Street in Brooklyn Heights (Zillow, Getty Images)
    No joke: Amy Schumer strikes deal for “Moonstruck” home
    No joke: Amy Schumer strikes deal for “Moonstruck” home
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...