China Property Stocks Sink as New Mortgage Rules Tighten Developer Financing
Thestandard · 1 SOURCESabout 3 hours ago2 MIN
Summary
Chinese property developers' shares fell sharply on Monday after mainland authorities released regulatory changes aimed at stabilising the crisis-hit real estate sector. The CSI300 Real Estate Index dropped 2 percent in early trading, while an index tracking Hong Kong-listed Chinese developers fell more than 4 percent. The Hang Seng's Hong Kong developers index also lost more than 3 percent, with major state-backed firms including China Jinmao and Greentown China declining at least 10 percent each.
Key Points
- Central bank and financial regulator issued new rules on Friday requiring mortgages to be issued only after project completion
- CSI300 Real Estate Index fell 2 percent and Hong Kong-listed Chinese developers index dropped over 4 percent on Monday
- State-backed developers China Jinmao and Greentown China each declined at least 10 percent in Hong Kong trading
- China Resources Land fell more than 7 percent and China Overseas Land & Investment declined over 6 percent
- Maximum personal mortgage term extended from 30 to 40 years to reduce homebuyers' debt burden
Why It Matters
The sweeping regulatory overhaul targets the pre-sale model that has underpinned China's property market for decades, forcing developers to seek alternative financing sources. Everbright Securities said most small players will not be able to make a profit and will have to exit the market, signalling accelerated consolidation in a sector that accounts for a significant portion of Hong Kong-listed companies' revenues and investment portfolios .
The sweeping regulatory overhaul targets the pre-sale model that has underpinned China's property market for decades, forcing developers to seek alternative financing sources. Everbright Securities said most small players will not be able to make a profit and will have to exit the market, signalling accelerated consolidation in a sector that accounts for a significant portion of Hong Kong-listed companies' revenues and investment portfolios .