China’s state-owned lenders have responded to Beijing's call to bolster the struggling housing market by allocating a minimum of 60 billion yuan ($8 billion) in loans to eligible property projects. This move signals a concerted effort to address the challenges facing the real estate sector.
Agricultural Bank of China Ltd. disclosed that it has greenlit over 40 billion yuan in loans for real estate ventures listed on approved white lists.
This substantial allocation underscores the bank's commitment to supporting the development of the housing market, as announced in a statement released on Monday.
Similarly, China Construction Bank Corp. revealed that it has disbursed 3 billion yuan to five property projects, with an additional 20 billion yuan worth of loans in the pipeline as reported by Bloomberg. This proactive step demonstrates the bank's dedication to fulfilling the financing needs of the housing sector, as disclosed late Friday.
Local branches of Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. have also joined the effort by providing financial backing to select projects, as indicated in statements over the weekend. However, specific details regarding the total loan amounts extended or planned were not disclosed.
These announcements come in response to Beijing's directive last month urging local authorities to enhance support for developer financing and compile lists of qualifying projects.
Policymakers have instructed banks to increase lending to the property sector, which experienced sluggish credit growth in the last quarter, posing challenges for developers in completing housing projects.
To streamline this process, central government officials have established a "coordination mechanism," tasking major banks with approving white lists of property projects while enlisting local authorities to ensure project advancement.
Notably, a variety of housing projects from financially strained developers, such as Country Garden Holdings Co. and Sunac China Holdings Ltd., have made it onto these white lists, as reported by the companies themselves.
The four major state-owned lenders have pledged to actively meet the "reasonable financing demand" of developers and eligible projects under this coordination mechanism.
Since late January, five national state-owned banks have been evaluating over 8,000 residential projects for potential inclusion on white lists, according to data compiled by China Index Holdings.
Despite these efforts, authorities continue to grapple with a slowdown in China's property market, exemplified by a 34.2% year-on-year drop in new home sales last month.
Although there was an increase in existing home transactions during the Spring Festival holiday, new home sales remained sluggish, impeding the much-needed cash flow recovery for struggling developers.
Average daily sales of new homes in 25 major cities tracked by China Index Holdings declined by 27% in terms of area compared to the previous year. "While there was an uptick in homebuyer visits to new-home projects during the holiday period, buyers remain cautious and adopt a wait-and-see approach," noted Chen Wenjing, associate research director at China Index Holdings. "The property project financing support from state lenders may gradually bolster their confidence."
19.02.2024
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