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Increased bank loans help push housing price up

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-04-21 13:37

New loans to individual home buyers increased by 53.4 percent year-on-year to 522.7 billion yuan ($76.57 billion) in the first quarter of 2010, 10.3 percentage points higher than at the end of 2009, according to the latest statistics released by the People's Bank of China (PBOC), the central bank, on Tuesday.

The accelerated increase in personal mortgages indicated that bank lending was playing an important role in pushing up housing prices in the first three months of this year and showed regulators the direction they needed to go, China Business News reported.

The real estate industry benefited from last year's moderately loose monetary policies. According to statistics recently released by the National Bureau of Statistics, investments in property development reached 3.62 trillion yuan in 2009, a year-on-year increase of 16.1 percent. Among which, 1.13 trillion yuan was from domestic loans, mostly from banks.

Bank lending continued to flow into the real estate sector in the first quarter of this year as new loans for property development increased by 31.1 percent year-on-year to 320.7 billion yuan, the PBOC statistics showed.

A series of strict policies were released to curb soaring bank lending to cool down the housing market. After raising the deposit reserve ratio, curbing land hoarding and increasing down payment requirements and mortgage rates for second-home purchases, the China Banking Regulatory Commission is working to establish detailed policies for second-home purchases.