Loans to Chinese property developers up 23% in 2014

[BEIJING] Chinese banks accelerated lending to property developers last year, with loans rising 23 per cent from 2013, data showed on Friday, evidence that authorities are telling banks to pump more cash into the housing market to support the economy.

Developers took 5.63 trillion yuan (US$904 billion) worth of loans last year, up 22.6 per cent on an annual basis and faster than a 15 per cent growth in 2013, central bank data showed.

But buoyant lending to developers contrasted with more subdued lending to home buyers. Mortgages rose 17 per cent in 2014 from a year ago, slowing from growth of 23 per cent in 2013.

Still, the solid expansion in overall real estate loans indicates that the Chinese government has thrown its weight behind the housing market to offer policy support, and lift a sector that accounts for about 15 per cent of China's economy.

Once notorious for its stubborn exuberance, China's housing market weakened to become one of the biggest drags on the world's second-largest economy last year, hurt in part by a large supply of unsold homes in smaller cities.

Yet even with the housing slump, mortgages are seen by banks to be among the safest loans in China because downpayment levels vary between 30 per cent and 60 per cent.

Bank lending in China is an indication of official policy as Chinese banks, being state-owned, have to heed government orders on whom to lend to and when to lend.

REUTERS