China’s crackdown on housing speculators buying property with consumer loans cools down prices
- The move by regulators has uncovered some ‘unscrupulous housing speculators’ who are rushing to cash out to repay consumer and personal loans, brokers say
- The crackdown has proved to be effective, as home prices have started to stabilise in major cities like Shanghai
Housing speculators in China find themselves in the crosshairs of regulators who are forcing them to sell property bought with personal and consumer loans, as authorities look to cool a buying frenzy.
In China, loans must be used in accordance with the loan agreement with the banks. Investing consumer loans in properties or using loans granted to companies’ operations to buy stocks is illegal and amounts to a criminal act.
Brokers said the step taken by the central and local governments has uncovered some “unscrupulous housing speculators” who are rushing to cash out to repay the principal and interest owed to banks.
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“Some homeowners are eager to sell pre-owned homes these days and are willing to offer a discount [to interested buyers],” said Song Yulin, a senior manager with property agency Baonuo, in Shanghai. “They want the transactions to be conducted as soon as possible.”
In January, China Banking and Insurance Regulatory Commission asked banks to investigate personal and consumer loans extended since June 2020, to expose borrowers who used the proceeds to buy residential property.