China’s property market slump is showing some signs of having hit bottom but that’s not translating into increased demand for new mortgages, which grew by the smallest amount on record in the first three months of this year.
(Bloomberg) — China’s property market slump is showing some signs of having hit bottom but that’s not translating into increased demand for new mortgages, which grew by the smallest amount on record in the first three months of this year.
The outstanding amount of individual mortgages rose to 38.9 trillion yuan ($5.6 trillion), only 100 billion yuan higher than the same period in 2022, according to data from the People’s Bank of China. As well as weak demand for new loans, the increasing trend to repay loans early is cutting into the total amount of outstanding loans, with people across China increasingly paying off some or all their mortgage early as they seek to reduce debt amid a gloomy outlook for incomes and declining investment returns.
Total loans to the property sector grew by 672 billion yuan to 53.9 trillion yuan, the data showed, driven mostly by a pick up in borrowing by developers. Outstanding loans for property development expanded 5.9%, faster than the 3.7% growth at the end of December. Policymakers have pushed banks to increase lending to the struggling sector in recent months.
The property industry rebounded for the first time in more than a year in the first quarter as prices and sales improved, but investment in the sector continued to decline. The sustainability of the recovery remains in question, as the pace of home sales in 50 big cities likely slowed in April from March.
China’s top officials repeated a pledge to curb speculation in the property market and facilitate the industry’s stable and healthy development in a meeting of the Politburo on Friday.
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