Home sales in China are slowing down due to longer mortgage approval times as Beijing seeks to calm growth

China’s government is trying to slow down red hot home sales by tightening up mortgage practices, which is leading to delays in loan approvals of as long as 108 days in some cities.

Anna Li sold her home in Jinhua, Zhejiang Province at the beginning of April for around 2 million yuan (US$309,000). She received a down payment of 800,000 yuan immediately, but the rest was subject to payment from the buyer once the mortgage was settled.

“My plan was to sell the old home and use that money for a larger home,” said Li. “But due to a long delay my plans have been ruined as the home I wanted to buy has been snapped up by another buyer – I’ve already waited almost three months, what can I do but wait longer?”

A slowdown in home sales is likely good news for Beijing, which is keen for measured growth in China’s economy after the pandemic but wants to avoid any overheating and spillover effects from expansionary US monetary and fiscal policy. Chinese policymakers are also anxious to avoid housing affordability issues spilling over into potential social instability.

“We will keep the prices of land and housing, as well as market expectations stable,” Premier Li Keqiang said in his annual work report to China’s legislature in Beijing in March. “We will address prominent housing issues in large cities [and] make every effort to address the housing difficulties faced by our people, especially new urban residents and young people.”