China Claims Homebuyer Mortgage Boycott Successfully Forced Resumed Construction

A man works at a construction site of a residential skyscraper in Shanghai on November 29, 2016. - Chinese household debt has risen at an "alarming" pace as property values have soared, analysts say, raising the risk that a real estate downturn could send shockwaves through the world's second largest …

Dozens of housing projects across China recently resumed construction after their stalled progress inspired a nationwide boycott in which Chinese homebuyers pledged to halt mortgage payments on pre-purchased, unfinished homes until building continued, China’s state-run Global Times claimed on Sunday.

The newspaper relayed details of a report first published by China’s Financial News media outlet on July 16, writing:

A housing project belonging to Greenland Holdings Co in Ganzhou, East China’s Jiangxi Province has resumed construction lately. Construction workers were spotted reentering the construction site. Following negotiation, the regional government there decided to purchase part of the project’s land which had not yet begun construction and return nearly 400 million yuan ($59.2 million) of land transfer fees to Greenland according to the progress of the construction, the news report said.

Another housing project named Mingmen Cuiyuan in Zhengzhou, Central China’s Henan Province, is expected to resume construction in August. Multiple departments, including the project’s developer and the developer’s actual controller, have set up a special fund to promote the resumption of the housing project.

A subsidiary of the debt-ridden China Evergrande Group whose businesses concentrate in the Pearl River Delta region in southern China, said on its Wechat account on Friday that 59 of its housing projects across the region have resumed construction, with over 12,000 workers active on construction sites.

News that multiple Chinese housing projects restarted construction activity as of July 16 came 48 hours after Chinese regulators on July 14 announced plans to stimulate building at housing sites where progress had recently plateaued.

“The China Banking and Insurance Regulatory Commission said on Thursday [July 14] that it will guide financial institutions in risk management under the trends of the market and pledged to keep stability in real estate financing after some homebuyers defaulted on their mortgages as developers delayed deliveries,” the Global Times reported.

China’s central government expressed plans to intervene in the nation’s real estate industry last week after a number of Chinese citizens refused to pay mortgages on unfinished homes they had previously purchased until they witnessed tangible progress on the construction sites. The rash of disbursement holds prompted a general boycott of mortgage payments across China that caused over 100 delayed housing projects to report mortgage defaults in recent days.

Song Ding, a research fellow at Shenzhen’s China Development Institute, expressed skepticism to the Global Times on July 17 about “whether the stalled projects resumption could be sustained.”

He said it “remains to be seen” if Beijing can make a lasting difference to China’s mortgage default crisis “given the liquidity pressure facing the cash-strapped developers.”


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