Chinese banks extended 1.26 trillion yuan (HK$1.55 trillion) in loans to property developers and home buyers last year, down 38 per cent from 2010, the central bank said yesterday.
New loans to property developers and homebuyers have been falling for the past couple of years since Beijing introduced austerity measures to rein in the property market, including raising mortgage rates and down-payment requirements and stopping people from buying more than two homes.
The People's Bank of China said in a report that the property loans accounted for 17.5 per cent of total new loans issued last year, compared with 26.9 per cent in 2010.
Outstanding loans to property developers totalled 2.72 trillion yuan at the end of December, and the growth rate slowed to 17 per cent from 23 per cent a year earlier.
But Yao Wei, China economist at Societe Generale, said the figures 'only reflect a part of the picture'.
Figures in the report did not include loans to the property market made through various forms of off-balance-sheet businesses at some financial institutions, nor did they cover funds provided by trust companies and private lenders, she said.
The growth rate of property loans and their overall level must be higher than the official central bank report showed, Yao said.
The report said Chinese banks issued 7.47 trillion yuan in new loans last year, down 6 per cent from 7.95 trillion yuan in 2010.
Mid-to-long term loans to the manufacturing and service sectors grew more slowly, with new lending to manufacturers falling 35 per cent to 517.1 billion yuan compared to a year earlier.
New short-term loans and bill financing reached 3.1 trillion yuan, almost triple the level recorded in 2010.
Despite fewer loans to the property sector, government-backed affordable housing development programmes drew as much as 175 billion yuan in new loans during the year, amounting to half of total new loans in property development.
With an increasingly shaky global economy casting a pall over developing markets, some market researchers expected Chinese banks to issue more than 1 trillion yuan in new loans in January to allay market concerns.
Lu Zhengwei, chief economist at the Industrial Bank, said new loans issued this month would reach 1.1 trillion to 1.2 trillion yuan and about 8 trillion yuan for the whole year.
But Lu added the rise in loans was unlikely to change the prevalent pessimistic view that China's export and import sectors were likely to record a year-on-year drop this month.
Yao Wei said the percentage of property loans out of total new loans would remain low in the first half, but was likely to rise in the second half with loosened control from the government.
In addition, loans to small and medium enterprises and to rural areas would keep increasing strongly this year.
Property prices in first tier cities need to fall by up to this amount to reach a 'reasonable' level, according to the People's Bank of China