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No more easy access to house payments
By Cao Qian |
August 19, 2010, Thursday
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Print Edition
Print Edition
REAL estate developers in Beijing might not be able to directly accept payments for the purchase of uncompleted homes in the near future due to stepped-up efforts to strengthen supervision of the property market.
Under the new rules which may be implemented as early as this year, money from home buyers, or payments from commercial banks if mortgages are involved, would go into designated bank accounts, which developers can only access with approval from supervising agencies, according to several media reports, all citing unidentified sources from developers or other industry insiders.
Developers would also be prohibited from taking all of the money at one time and would instead gain access to the funds in four installments, the reports said.
"Generally, real estate developers will encounter intense capital pressure if such rules are implemented," said Sky Xue, an analyst at China Real Estate Information Corp, a major real estate information, consulting and online services provider.
"In particular, those with tight cash flows will have to offer some price discounts to replenish their capital."
The Ministry of Housing and Urban-Rural Development said in April that local governments should quickly work out a better mechanism to supervise developers' access to funds from the sale of uncompleted properties, without giving a time line when the rules should be implemented.
China has since mid-April launched its toughest-ever curbs to fight against a housing price bubble, including higher down payment and interest rates on second homes, suggested suspension of mortgages for third homes in cities where prices have skyrocketed and inclusion of home ownership records in lending criteria.
The curbs appear to have hit property sales volumes but have so far not knocked prices off their highs much.
Under the new rules which may be implemented as early as this year, money from home buyers, or payments from commercial banks if mortgages are involved, would go into designated bank accounts, which developers can only access with approval from supervising agencies, according to several media reports, all citing unidentified sources from developers or other industry insiders.
Developers would also be prohibited from taking all of the money at one time and would instead gain access to the funds in four installments, the reports said.
"Generally, real estate developers will encounter intense capital pressure if such rules are implemented," said Sky Xue, an analyst at China Real Estate Information Corp, a major real estate information, consulting and online services provider.
"In particular, those with tight cash flows will have to offer some price discounts to replenish their capital."
The Ministry of Housing and Urban-Rural Development said in April that local governments should quickly work out a better mechanism to supervise developers' access to funds from the sale of uncompleted properties, without giving a time line when the rules should be implemented.
China has since mid-April launched its toughest-ever curbs to fight against a housing price bubble, including higher down payment and interest rates on second homes, suggested suspension of mortgages for third homes in cities where prices have skyrocketed and inclusion of home ownership records in lending criteria.
The curbs appear to have hit property sales volumes but have so far not knocked prices off their highs much.
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