Friday 20 February 2009
In Shanghai, Falling Housing Lending Mirrors Falling Real Estate Market
Personal housing lending in Shanghai has been dropping month by month. According to a report released by the Shanghai Banking Regulatory Bureau on the real estate market and real estate credit in Shanghai in 2008, housing credit growth of domestic and overseas banks in Shanghai was 14 percentage points lower for the year.
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In Shanghai, Falling Housing Lending Mirrors Falling Real Estate Market
CSC staff, Shanghai
19 February 2009
Personal housing lending in Shanghai has been dropping month by month. According to a report released by the Shanghai Banking Regulatory Bureau on the real estate market and real estate credit in Shanghai in 2008, housing credit growth of domestic and overseas banks in Shanghai was 14 percentage points lower for the year.
By the end of last year, the commercial housing loan balance of domestic and overseas banks in Shanghai totalled 593.56 billion yuan, an increase of 19.32 billion yuan over the beginning of 2008. The growth is 38.692 billion yuan, or 2/3, lower than the growth in 2007. Housing lending growth in the first, second, third, and fourth quarters of 2008 stood at 13.278 billion yuan, 8.692 billion yuan, 2.709 billion yuan, and –5.359 billion yuan, respectively, dropping quarter by quarter.
Among all housing lending, development loans for residential housing grew slowly while those for commercial building grew faster. At the end of 2008, housing development loans in Shanghai totalled 215.395 billion yuan, an increase of 8.994 billion yuan over the beginning of the year, but 2.66 billion yuan lower than the growth in 2007. Of that total, property development lending dropped by 3.25 billion yuan from the beginning of the year, while residential housing development lending increased 3.013 billion yuan, 1.659 billion yuan higher than the increase in 2007. But since August last year, residential housing development loans have seen negative growth for five straight months. Commercial development lending grew by 11.345 billion yuan over the beginning of 2008, 4.83 billion yuan higher than the growth in 2007.
Personal housing lending growth in 2008 was lower than it in 2007 due to low turnover on the market. In Shanghai personal housing lending totalled 310.769 billion yuan at the end of last year, 8.89 billion yuan up since the beginning of the year, but 34.599 billion yuan lower than the increase in 2007.
Inventory housing lending grew by 12.361 billion yuan last year, 1.028 billion yuan higher than the growth in the previous year. Lending for newly constructed housing dropped by 3.471 billion yuan, 35.627 billion lower than the growth in 2007. On the other hand, growth of housing lending to non-residents and foreigners reached 5.607 billion yuan, higher than that to local residents, totalling 3.283 billion yuan.
At the end of last year, Shanghai’s non-performing loan (NPL) balance totalled 6.169 billion yuan, an increase of 1.036 billion yuan over the beginning of the year. The NPL ratio grew by 0.15 percentage points to 1.04%. The quality of personal housing lending has been well controlled. Non-performing personal housing loans totalled 1.872 billion yuan at the end of last year, 254 million yuan lower than at the beginning of the year, and the NPL ratio stood at 0.6%, 0.1 percentage points lower than it at the beginning of the year.
Shanghai’s real estate market entered a downturn in the second half of last year. Despite signs of rebound in December led by stimulus policies of the central and local governments, housing prices look to continue to decline.
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