Shanghai banks urged to lend to developers building rental homes in bid to increase affordable housing
- In a rare move, the city’s banking authorities have asked some commercial banks to extend credit to developers to build more rental homes
- ‘Increasing the supply of affordable rental homes for young citizens is an effective way of improving housing conditions,’ said the local branch of the PBOC
The move represents a policy adjustment by financial regulators in Shanghai towards gradually loosening the restrictions on loans to the property sector.
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“Increasing the supply of affordable rental homes for young citizens is an effective way of improving housing conditions for all the people, and hence achieving common prosperity,” the central bank’s Shanghai branch said in a statement after a government conference at the weekend.
It said home builders including Shanghai Land (Group), Shanghai Chengtou, Dahua Group and Shui On Land have signed preliminary agreements with major lenders like Industrial and Commercial Bank of China for future credit extensions, without disclosing the size of the loans.
“The signing of the [agreements] has far-reaching significance for the property sector,” said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. “The central and local governments still acknowledge the important role of developers and will continue to support those whose business models align with government guidance.”
It is rare for mainland Chinese banking authorities to directly urge commercial lenders to grant loans to specified companies unless their projects are of great significance to the national economy or social stability.
The mainland leadership emphasised that economic stability must be ensured next year, after the annual central economic work conference concluded on Friday.