The capital and the land are the lifeline of the real estate industry. Recently, a large amount of capital came into the real estate industry and it is the most important reason why the house price increased so rapidly. To contain the turbulent capital might be the possibility to control the rising price of real estate. And with this logic, tightening to the credit funds and the financing channels of the real estate companies will be the feature of this turning of control.
The most serious controlling of the real estate have already continued for one year and a half, but there are not running difficulties among those companies, and the house price has not fallen as much as people’s wish. Are the real estate companies having enough money?
The capital they have now is enough for surviving but not for development.
There are several reasons why the real estate companies have financial constraints. Beijing, for example, the rate of signing contacts of the new residential listings of forward house is just 7.1%. The low volume of the houses caused the slowing down of the capital return and most of the capital was quilt on the project.
On the other hand, the financial institutes are tightening the credit of real estate. Many developers express that they could hardly grant a loan from the bank.
Lacking of money of real estate companies will still going on, since the restriction of the second and third tier cities.
Source: People’s Daily
Translated and edited by Yang Jingmin