The Chinese government said in a statement posted online that banks should not lend to developers found by state agencies to have held land without building houses.
They should also stop approving new lines of credit to 78 government-controlled companies whose core business isn’t property development if they use collateral other than construction projects already in progress, the statement said.
China’s property prices rose 10.7% last month, the fastest pace in almost two years, fueling concern that record lending and inflows of capital from abroad are creating asset bubbles in the world’s third-biggest economy.
The government this month raised deposit requirements for buyers at land auctions to 20% of the minimum price to raise costs for developers. It also lifted banks’ reserve requirements twice this year and re-imposed a tax on home sales.
BusinessWeek reported that Zhao Qingming, a Beijing-based senior analyst at China Construction Bank, the nation’s second largest lender, said, “These measures are intended to urge developers with land to build houses and sell them quickly to increase market supply. It may curb fast growth in housing prices, but more measures are needed to tackle the root issue, including controls on land prices and speculative house-purchase investments.”