© Reuters. FILE PHOTO: A worker walks on scaffolding at a construction site for an apartment building undergoing redevelopment in Beijing, China, July 20, 2022. REUTERS/Thomas Peter
BEIJING (Reuters) – Warning that risks remain in the real estate market, China’s government said in a report released at the annual opening of parliament on Sunday that it would promote the stable development of the sector and prevent disorderly expansion by developers.
Premier Li Keqiang made risk protection for major property developers one of the government’s priorities this year amid still-cautious buying sentiment, following work at a key economic meeting in December.
“There are more potential risks in the real estate market, and some small and medium-sized financial institutions are exposed to risks,” Li said in the government work report for 2023.
Since mid-2021, the real estate sector has faced a cash crunch, with many developers defaulting or delaying debt payments as they struggle to sell apartments and raise funds. About half of the 30 Chinese developers listed in Hong Kong have defaulted or delayed bonus payments.
“There are many risks in real estate for homebuyers and developers, such as buyers’ threat to default on mortgage payments, non-delivery on previously sold homes, and debt default by of promoters, indicating a lack of consumer power and trust,” he said. Yan Yujin, an analyst at China E-house Research and Development Institution.
“Only when consumer demand for housing is boosted can other real estate problems, including the problem of financial risks for major real estate companies, truly be solved.”
Premier Li said the government will solve housing problems for young people and support the needs of home buyers.
China also insists that “housing is for living, not speculating,” according to a separate report by the state economic planner, though Li did not mention this in the government’s 2023 jobs outlook.
China will ensure that developers turn over previously sold properties and expand the supply of affordable rental housing, the planner said.
In 2022, cash-strapped real estate companies halted construction on many previously sold properties, prompting hundreds of buyers across the country to threaten to default on mortgage payments, in a rare display of public discontent. .
The housing market has shown some signs of recovery in recent weeks, as house prices rose in January for the first time in a year, helped by aggressive government support late last year and the removal of controls. from COVID.
However, buyers remain cautious, hindering the chances of a sustained rally.
An index tracking China’s real estate stocks has risen 2.5% so far this year, below the 7% rise in the benchmark CSI300 index, while an index for mainland property developers that listed in Hong Kong has lost approximately 3%, reflecting the equally cautious outlook of the market. .
