Industrial and Commercial Bank of China’s (ICBC) Beijing branch extended US$1.46 billion in loans to first time home buyers last year, twice the amount issued in 2008. Despite reports of impending tightening measures, property developers remain largely untroubled.
ICBC, and many other state-backed lenders, heavily promoted new home loan products and introduced wider discounts to benchmark mortgage rates as the central bank encouraged a “moderately loose” monetary policy to reboot the property market. The lending surge is held broadly responsible for emerging asset-price bubbles: housing prices inside Beijing’s Fourth Ring Road have risen to RMB25,907 (US$3,784) per square meter. With about 20% of bank loans estimated to be absorbed by the real estate sector, some localized tightening measures have already been initiated to rein in price growth.
No big sway in central government policy on real estate is expected until the second half of this year and developers seem to be brushing aside fears of these recent local initiatives. Among several developers that have been ramping up land bank acquisitions, China Overseas Land & Development (0688.HK) last weekend won its bid for a 283,000 square-meter plot for about US$900 million in Beijing’s Fengtai district. The company earlier racked up a series of land buys in Guangdong and Jiangsu provinces in January.