The Chinese property loan market grew at a slow pace in 2018 due to tightening of home purchase regulations by the government, but surprisingly the loans to property developer expanded faster than last year as per data of central bank. Outstanding of property loans grew by 20% when compared to last year bringing up the actual amount to 38.7 trillion Yuan and the outstanding amount from mortgage lending climbed by 17.8% to 25.75 trillion Yuan towards end of 2018. To ensure stability and healthy growth in property markets policy makers have emphasized that homes should be purchased for staying and not as a speculative investment.
The state’s drive to reduce risk of debt levels in the economy may have cooled the real estate market but a sustained downtrend in credit sector could put pressure on China’s economy say experts as this sector is a key driver of growth and weakness could put brakes on stimulus steps by government. Real estate investments in China rose by 8.2% during December that represented a come down of 9.3% from a month ago as per data released by National Bureau of Statistics.
Property developers increased their borrowings in 2018 slightly higher than last year representing an increase of 22.6% in 2018 when compared to increase of 21.7% in 2017. But the central bank also showed a disturbing figure that showed jump of 18.2% in outstanding home loans during end of 2018 that amounted to 47.9 trillion Yuan. The property investment market is looking a little shaky as analysts are awaiting government policies to see if current restriction would be loosened a little on home buyers that would allow them to start speculating again. This uncertainty has led to slow pace of growth in real estate market at just 7.7% in October 2018.