China has called on banks to extend more credit to developers, struggling due to the growing number of owners who refuse to pay their monthly payments, contributing to aggravate the crisis in real estate.
– Nouveau © adobestock In China, the number of housing starts has collapsed by 48% over one year.
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Developer delays enrage buyers
Weakened, some groups are struggling to continue their construction sites and to deliver housing units sold before their construction in due time. Pre-sales are the most common way in China to sell real estate.
Furious, owners refuse to pay their monthly payments in at least a hundred real estate projects in China, according to figures from the sector and analysts.
This strike of monthly credit payments raises fears of a risk of contagion to the financial system of the real estate crisis.
To guard against this, the regulator on Sunday urged banks to ” meet the reasonable financing needs of real estate businesses« .
It is essential to ” do a good job of customer service […] to honor contracts, keep commitments and protect the legitimate rights and interests of consumers“, underlined to state media the regulatory authority of banks and insurance.
Real estate and construction = A quarter of GDP in China
Real estate and construction weigh more than a quarter of China’s GDP and had served as the engine of the post-pandemic recovery.
But to reduce the indebtedness of the sector, Beijing has tightened the conditions of access to credit for promoters. Many groups therefore find themselves short of cash, including the number one in the sector, Evergrande.
Households reluctant to invest in stone
The poor financial health of this Chinese real estate champion is indirectly penalizing its competitors, with buyers showing themselves to be more and more reluctant to invest in real estate.
The uncertainties linked to Covid-19, which weigh on household income, are also cooling buyers. The strike of the monthly payments represents for the real estate sector “a vicious circle”, estimates the analyst Ken Cheung, of the Japanese bank Mizuho.
Because of lack of confidence in the sector, potential buyers postpone the acquisition of a property, which pulls down real estate prices, notes Mr. Cheung.
Fall in new construction sites in the first quarter
Real estate has long been a mainstay of growth in China, boosted by rising living standards and a buying spree, in a country where owning property is often a prerequisite for marriage. .
However, the number of real estate projects in China is declining, economist Rajiv Biswas of S&P Global Market Intelligence told AFP, noting a 48% drop over one year in the number of new construction sites in China. first semester.
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