>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
A number of Chinese cities including Zhengzhou, Ningbo and Xianyang have taken various actions to help property developers resume constructions of stalled projects after a growing number of homebuyers across the country threaten to stop making mortgage payments for unfinished properties.
Zhengzhou city, capital of central China’s Henan province, is creating a property developer bailout fund as increasing numbers of homeowners join a nationwide boycott of mortgage payments on stalled property projects.
The bailout, one of the first to deal with the intensifying mortgage revolt in the country, will be jointly established by Henan Asset Management and developer Zhengzhou Real Estate Group, according to a statement from the asset manager. The two entities are backed by the financing arms of the local government.
The fund aims to help “revitalise problematic property projects and rescue developers with difficulties”, Henan Asset Management said, without disclosing the size of the fund.
Zhengzhou is one of the most exposed city to the mortgage boycott out of 19 affected cities, according to data compiled by the E-House China R&D Institute, a real estate consultancy.
Other Chinese cities have also took various measures to deal with the mortgage boycott.
The housing authority in the city Xianyang, Northwest China’s Shaanxi province, recently summoned property developers, urging them to strengthen business management, take social responsibility and promote steady and healthy development of the real estate sector, according to a notice on Wednesday.
The authority pledged to take a “one-to-one” policy, referring to an approach in which each department of the housing regulator is responsible for helping one property developer address difficulties, and urged homebuilders to accelerate property construction and ensure home deliveries while ensuring project quality.
On the same day, the housing regulator in Suining city, Southwest China’s Sichuan province, pledged to set up a mechanism, under which each senior government official is responsible for one of 83 ongoing and pending property projects in the city, asking the officials to get thorough understanding of the situation of the projects and conduct regular communications to address the developers’ difficulties.
Suining unveiled nine measures including stepping up support to quality homebuilders, asking financial institutions not to withdraw and withhold loans to property developers and to maintain steady lending to the sector, etc, according to the notice.
The local government of Zhengyang county, Zhumadian city in Henan province, held a meeting on Monday, pledging “one-developer-one-policy” and “one-project-one-policy” approach to solve the problems in a targeted and effective way and protect home buyers’s legitimate interests.
Pingdingshan city, Henan province, held a meeting last week about the mortgage boycott, promising to take a variety of measures to solve the problem by the end of September.
Local governments in Chongqing and Ningbo have also set up working groups to address unfinished projects, according to local media reports.
Many homebuyers across China have threatened to stop making mortgage payments for properties they bought that have been left unfinished. The boycott has spread to more than 300 property projects across the country as of Sunday from 200 projects last week, according to a crowdsourced document titled “WeNeedHome”.
Embattled property developers China Evergrande Group, Sunshine City, Sunac and Kaisa are among those hit by the boycott. The action has raised concerns of default risk at banks, forcing lenders to disclose their exposure to stalled property projects. Sixteen listed banks revealed that a small portion of loans were vulnerable to damage.
Over the weekend, China’s top banking regulator urged banks to extends loans to property developers and maintain steady lending to the sector to help them resume construction and pledged to step up co-ordination with the central bank and housing regulator to “guarantee the delivery of homes”.