China’s Ministry of Housing and Urban-Rural Development, in collaboration with the National Financial Regulatory Administration, has urged local governments to enhance their coordination with financial institutions. This collaboration aims to provide targeted financing support to real estate projects, a move designed to rejuvenate the currently sluggish housing market.
China Is Looking To Coordinate Housing Sector Financing Better
The two regulatory bodies have declared their intention to establish a system that will more effectively address the financing requirements of real estate projects. This initiative is geared towards fostering stable growth within the housing sector, as detailed in a joint statement they released last Friday.
Since mid-2021, China’s real estate industry has been struggling with a liquidity crisis. This challenge has seen key developers facing defaults or delays in debt repayments as they grapple with apartment sales and funding challenges. This crisis has significantly impacted the economic growth of the world’s second-largest economy.
To mitigate these challenges, the Ministry of Housing and Urban-Rural Development and the National Financial Regulatory Administration have requested local governments to identify real estate projects that qualify for financial support. This directive was part of the statement they issued.
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The regulators emphasised that financial institutions should expedite the loan approval process for projects that present adequate collateral, reasonable liabilities, and secure sources for repayment.
Furthermore, they advised that financial institutions should avoid hastily withdrawing, halting, or holding back loans from projects that, despite facing temporary difficulties, are maintaining a fundamental balance of funds.
Additionally, the regulators suggested that support would be provided for measures such as extending current loans, modifying loan repayment schedules, and offering new loans to facilitate the progress of these projects. This guidance reflects a concerted effort to stabilise and stimulate the real estate sector, which is crucial for the overall health of China’s economy.
