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China calls on banks to support real estate sector - Immo

China calls on banks to support real estate sector – Immo

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.

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 monthly payment strike raises fears of a risk of contagion to the financial system of the real estate crisis.

To guard against this, the regulator urged banks on Sunday 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,” the banking and insurance regulator told state media.

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.

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.

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. .

Weakened, some groups are struggling to continue their construction sites and to deliver homes sold before their construction in due time. Pre-sales are the most common way in China to sell a property. 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 monthly payment strike raises fears of a risk of contagion to the financial system of the real estate crisis. To guard against this, the regulator urged banks on Sunday to “meet the reasonable financing needs of real estate businesses”. It is essential to “do a good job of customer service […] respect contracts, keep commitments and protect the legitimate rights and interests of consumers,” the banking and insurance regulator told state media. 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 sector’s indebtedness, Beijing has tightened the conditions of access to credit for developers. Many groups therefore find themselves short of cash , including the number one in the sector, Evergrande. The poor financial health of this Chinese real estate champion is in turn penalizing its competitors, with buyers showing themselves to be more and more reluctant to invest in stone. The uncertainties linked to Covid-19 , which are weighing on household income, are also chilling buyers. Real estate has long been a mainstay of growth in China, galvanized by rising living standards and a buying frenzy. ts, in a country where the acquisition of property is often a prerequisite for marriage.

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