Banks are required to be watchful over risks in commercial real estate as speculation has ramped up recently
Chinese regulator has warned banks of risks from speculation in commercial real estate, and real estate in smaller cities, the China Securities Journal quoted sources as saying.
Many banks have received such a notice from China Banking Regulatory Commission, requiring them to be watchful over risks in commercial real estate as speculation has ramped up recently; meanwhile, banks should keep alert on risks of real estate sector in smaller cities, or the so-called second –and third-tier cities, which have embraced active investment and speculation, but without any policy controls like those in the biggest cities, the newspaper said.
It also warned that lenders, especially non-financial institutions, should not be allowed to increase loans recklessly.
Stricter monitoring would be imposed on the commercial real estate mortgages and personal consumption loans and the standard of extending loans to these sectors would be lifted higher than that of residential houses, according to the report.
Early signs of tightening in commercial real estate and real estate in second-and third-tier cities have shown when Shanghai in September called a halt of activities using loans for “personal consumption purposes” to acquire commercial houses. It also ordered banks to extend commercial loans only after the housing project’s completion of inspection and acceptance.
Premier Wen Jiabao said in an essay in early September that China’s measures to control its property market are at a critical stage and the nation needs to focus efforts on cubing housing gains in second-and third-tier cities.
Quzhou, a prefecture-level city in southwestern Zhejiang Province, China, has become the first second-and third-tier city to impose home purchasing controls, rejecting the third and-plus home buyers in the city. Critics however said the restrictions are somewhat lenient, reflecting local governments’ reluctance in controlling housing prices.
Source:caijing