The number of new property-related loans in China has continued its downward trend in the third quarter, coupled with the capital strains experienced by realty firms, revealed the People’s Bank of China (PBOC).
For the first nine months leading to 30 September, new property-related loans — which include mortgage loans to home buyers and loans to property developers — amounted to 992.3 billion yuan (S$156.78 billion), down 42.8 percent over the same period last year, according to China’s central bank.
Outstanding property-related loans climbed 14.6 percent year-on-year to 10.46 trillion yuan (S$2.06 trillion).
For 2011, mortgage loans declined quarter-on-quarter in light of the government’s measures to curb inflation and cool the heated property market. The central bank noted that loans totalled 201.1 billion yuan (S$39.56 billion), 281.7 billion yuan (S$55.42 billion) and 509.5 billion yuan (S$100.24 billion) in Q3, Q2 and Q1 respectively.
Zhang Dawei, Senior Researcher with Centaline Property Agency Limited (Beijing), said real estate developers are faced with tougher access to financing with limited credit lines and elevated borrowing rates.
“Home sales are falling and inventories building up. Real estate developers, especially those small and medium-sized firms, are under unprecedented pressure,” Zhang said.
A report by Standard & Poor’s (S&P) noted that stricter credit policies and tighter monetary stances will continue to trim down property-related loans and thereby affect developers’ sales, consequently increasing financial strain in the coming year.
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