New property related loans down 42.8% in China

According to data from the People’s Bank of China (PBOC) and published by the China Daily, new property related loans including loans provided to property developers and new home buyers fell to 992.3 billion yuan between January and September, down 42.8 percent compared to the same time the year earlier.

Quarterly statistics show a continued trend down. In the January to March quarter 509.5 billion yuan of loans were written, followed by only 281.7 billion yuan in the June quarter and 201.1 billion in the September quarter.

The Central Government has been working to cool the overheating property market in China using interest rate rises, increases in bank reserve ratios and limits to the number of houses citizens could purchase.

Zhang Dawei, a senior researcher with the Centaline Property Agency Limited told the China Daily “Home sales are falling and inventories building up. Real estate developers, especially those small and medium-sized firms, are under unprecedented pressure.”

The reduction in demand for loans is having a flow on effect on prices with some apartment developers having to drop prices by as much as 36 percent in order to move inventory. For owners who have just brought, falling property prices is causing anger and protests in the streets.

The Wall Street Journal reported a group of about 400 home buyers in Shanghai demonstrated about falling property prices outside of a showroom of China Overseas Land & Investment Ltd. During the demonstration, some owners trashed the showroom.

In another case in the Jiading District, 30km from Shanghai homeowners smashed a glass door and sprayed graffiti over the walls of the Moco showroom of property developer Longfor. Some of the graffiti accused Longfor of being a swindler, while other walls read “Get rid of Longfor” and “Pay my money back.”

» Falling housing loans add to home builders’ woes – China Daily, 29th October 2011
» Home prices decline in suburbs – China Daily, 25th October 2011.
» China developer warns on price falls – Financial Times, 25th October 2011.
» Homeowners protest price cuts in Shanghai – Market Watch, 25th October 2011.
» Shanghai owners protest as developers slash prices – Taiwan News, 26th October 2011.
» Protests hit China as property prices fall – Agence France Presse, 27th October 2011.


  1. What a shamozle!. I had a conversation with a local in Zhengzhou city, Henan Province, China last year.
    He was saying that skyrocketing real-estate prices had already exceeded the reach of ‘the average Joe’.
    Those whom are rioting probably expected more skyrocket action!.
    He was trying to liaise within government to correct the situation.
    I wonder will there be riots in China if the price of rice drops too?.

  2. Gee, I love the interventionist policies and how they smooth the peaks and troughs. How angry are they going to be when their Australian property keeps falling and our currency goes back to 80c AUD?

    At least the Asians understand real money and are accumulating gold and silver to store their wealth. Australians just buy stupid electronics and fancy clothes and demand the government look after them. Good luck with that!!!!!

    Brace yourself for the protests here, forecasts show for 2012 will be a shocker, with unemployment rising and higher costs of living. remember that carbon tax thingie we forgot about? 1/7/2012 its here.

    Shanghai property reminds me of Tokyo 20 years ago.

    Arrgh the smell of deflation in all its glory……….

  3. I never would have believed that china has a worse housing bubble than us here then a couple of months ago I watched sbs dateline who did a story called Chinas ghost cities. It talked about how China is building 10 cities a year and that there is an estimated 64 million empty apartments. I guess you can have all the demand in the world but if the average worker can’t afford to buy then demand becomes irrelevant.

  4. Quote of the day

    “Lopping 25 basis points off interest rates to shore up the market is like trying to bail out the Titanic with a paper cup”

    Sighted in comments at

    If 30 year fixed term loans at 4% can’t save the US housing market we are so gone. The shadow-unemployment-stats are starting to rear their ugly head as we see housing sales plummet and inventory levels explode and prices go ….. (insert coles DOWN DOWN jingle here)

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