Limited upside in China’s 2018 home prices as banks keep mortgages, loans on short leash

There’s limited upside on China’s property prices going into 2018, as the country’s monetary authorities maintain their tight grip on the financial spigot and limit the amount of credits that can flow into mortgage loans, according to the consensus of a group of financial institutions and developers during a recent meeting.

Property transactions will shrink in volume, according to the majority of the 51 financial institutions and more than 20 developers assembled in a November 16 meeting organised by the china Index Academy in Beijing, according to meeting minutes seen by the South China Morning Post. Most banks said there’s little chance for either mortgages and property loans to grow next year, according to the minutes.

The meeting sheds light on how the property market in the world’s second-largest economy may be heading into a long winter, as the raft of speculation-curbing policies introduced in the past 12 months began to bite.

Chinese financial institutions are more cautious than real estate developers in the prospect of the real estate market in 2018, according to the document.

The outstanding value of China’s property loans, loans for developers and mortgages, grew at a slower pace during the first three quarters to 31.1 trillion yuan (US$4.7 trillion), according to data by the People’s Bank of China. The growth rate slowed by 2.4 percentage points to 22.8 per cent compared with last year.