[photopress:real_estate_China_Regulatory_Banking.jpg,full,alignright]China will rigidly control bank loans to the real estate industry during 2008. The China Business Post reported authorities at the recent Central Economic Work Conference decided to shift from a ‘prudent’ monetary policy, enforced for nearly a decade, to a ‘tighter’ policy.
Government measures will include not only restricting the total loan supply to property developers and investors, but also a potential floating loan rate.
The finalized plan for limiting the total amount and controlling the rates of loans to the property sector will start abut February 7 according to an official with the China Banking Regulatory Commission (CBRC).
The CBRC currently monitors property sector development in major cities across the country as well as the impacts on the sector of various government measures such as frequent hikes in the reserve requirement ratio.
In November, average property prices in China’s 70 big- and mid-sized cities rose by 10.5% over the same period of last year, said Cao Changqing, director of the price department under the National Development and Reform Commission, and shown here.
Statistics also showed that despite government efforts to curb the money supply, the bank loans for commercial estates totaled RMB4.62 trillion (US$626.76 billion) by the end of September, an increase of 29.6% year on year.
Of the total, RMB1.76 trillion was lent to estate developers and RMB2.86 trillion to mortgage borrowers.
Yi Xianrong, researcher with the Chinese Academy of Social Sciences said that as a capital-intensive sector, the property market relies heavily on bank loans and its increased activity is a direct result of financial support from the banks.
More than half of capital controlled by China’s property developers came from bank loans. However, under the new scheme of tight control bank loans to the property industry may drop by as much as 50% in 2008.
Source: China Daily