Local governments are taking action to prevent a downturn in the real estate industry from triggering further problems as concerns grow that bankrupt developers could run away with the funds for homes purchased before they were finished, reported Caixin.
More property developers have filed for bankruptcy this year than last, amid sluggish economic growth and tightening regulatory control over the real estate market and relevant financing channels, meant to curb speculation. As of Nov. 27, 459 real estate companies had filed for bankruptcy this year, slightly more than the 458 bankruptcy filings seen in the whole of 2018, according to calculations by research firm China Real Estate Information Corp. based on public court records.
Money flowing into property development has slowed, with investment growth of 10.2% year-on-year in the first 11 months of this year, down from a recent high of 11.9% growth in the January-to-April period, according to National Bureau of Statistics data. In addition, growth in outstanding loans has slowed for the last four quarters, dropping to 11.7% year-on-year at the end of the third quarter, according to central bank data.
Although there is no official data on how many properties have been left unfinished as a result of developer bankruptcies, some local governments have begun to tighten regulations governing the funds property developers take from sales of off-plan homes.