BEIJING — Loans to China’s property sector expanded at a slower pace due to strict purchase rules and ongoing financial deleveraging.
Outstanding property loans amounted to 29.72 trillion yuan (nearly $4.5 trillion) by the end of June, up 24.2 percent from a year ago, the People’s Bank of China said in a report on July 21. The growth rate retreated from the 26.1-percent increase seen at the end of March.
Individual mortgages, accounting for around two thirds of the total, increased 30.8 percent year on year, a marked slowdown from the 35.7 percent a quarter ago.
The data added to signs of a cooling property market which had witnessed lackluster price growth and shrinking deals in the country’s top-tier cities amid tough policy restrictions.
Average price increases for new homes have decelerated for nine consecutive months in the four largest cities -- Beijing, Shanghai, Guangzhou and Shenzhen -- while in second-tier cities, prices have eased for seven straight months, data from the National Bureau of Statistics showed on July 18.
Prices for existing homes also posted slower annual growth in June compared with the previous month.
The effects of the government’s firm controls are starting to pay off, said Ren Xingzhou, an analyst at the Development Research Center of the State Council.
Since the end of 2016, dozens of local governments have passed or expanded their restrictions on house purchases and increased the minimum down payment required for a mortgage.
The market was also cooled by relatively tightened liquidity conditions in China as the government moved to contain leverage and risk, with asset bubbles highlighted. In face of strengthened supervision, financial institutions adopted more rigorous loan application reviews, which reined in the mortgage expansion.
Despite signs of cooling, analysts expect the government to continue the tight regulation in the second half of the year.
Ren said the government should continue the tough curbs to contain speculation while increasing land supplies and affordable housing to ensure the health of the market.
The central bank report also showed robust increases of loans to the real economy, especially those to small businesses, services and rural areas.
Outstanding loans by financial institutions totaled 114.57 trillion yuan by the end of June, up 12.9 percent year on year. The growth pace quickened from the 12.4 percent a quarter ago.