A Chinese city rolled out a series of easing measures to boost liquidity at property developers, becoming the first major local government to address a cash crunch engulfing the real-estate industry.
Chengdu, the capital of the southwestern province of Sichuan with a population of about 21 million, is to accelerate approvals for home sales and property loans, as well as ease restrictions on using proceeds from pre-sales, a statement by the local housing authority late on Wednesday said.
“Chengdu is the first city authority to call for faster property-related loans in a clear official statement,” said Yan Yuejin (嚴躍進), research director at Shanghai-based E-house China Research and Development Institute (易居房地產研究院). “We may see other initiatives to press banks on faster mortgages soon.”
The move to boost liquidity in the beleaguered building sector comes as China’s home slump deepens, adding pressure on authorities to stabilize an industry that is estimated to account for almost one-quarter of economic output.
Some cities last week relaxed rules for land sales — a key revenue source for municipalities — after cash-strapped developers became reluctant to bid.
China’s State Council is calling on local governments to sell more special bonds this year to boost investment amid a slowdown in the economy.
Regulators are fine-tuning their long-running crackdown on the property sector after a credit crunch at China Evergrande Group (恆大集團) and other junk-rated developers began spreading to higher-rated peers.
In late September, the central bank urged financial institutions to help local governments stabilize the rapidly cooling housing market and ease mortgages for some homebuyers. Official media reported in recent weeks that faster mortgages are already on the way.
Chinese Premier Li Keqiang (李克強) chaired a meeting of the State Council on Wednesday, urging local governments to execute more public works projects at the beginning of next year, Xinhua news agency reported.
Regional governments should step up project preparation, facilitate the launch of works that are mature and make reasonable requests for special bond quotas next year, Xinhua said.
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