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China's real estate loans will keep its rising momentum in the coming years due to people's demands to improve their living conditions, according to a report released yesterday by People's Bank of China (PBOC), the country's central bank.
By the end of 2004, theoutstandingloans of China's financial institutions were 17.7 trillion yuan (US$2.2 trillion) and PBOC estimates the outstanding loans this year will reach 20.2 trillion yuan (US$2.5 trillion).
And theindividual housing loanswould be 1.9 trillion yuan (US$ 234.6 billion), 22 per cent higher than last year.
People's demands for better living conditions and the resettlement projects would be main reasons for house purchases, usually supported by bank loans, according to the report.
There is still plenty of room for rising individual housing loans because compared to developed countries, the size of such loans in China is still very small, the report said.
The individual housing loans in China account for about 11.7 per cent of the country's GDP by the end of 2004. While in 2001 the number is 39 per cent in the European Union and 60 per cent in England.
Real estate loans by the "big four" State-owned commercial banks have been operating well. The averagenon-performing loans(NPLs) ratio of the four lenders stands at about 5 per cent.
The individual housing loans are even better. The average NPLs are as low as only 1.5 per cent.
However, there are still some potential risks in issuing loans in the real estate sector, the report said.
The overheating real estate market in many big cities poses a potential risk for the commercial lenders.
Last year, house prices in downtown Shanghai increased 27.5 per cent than the previous year, and large amounts of "hot money" has been flooding into Shanghai. Statistics by the central bank show that in the last quarter of 2004, about one quarter of the money used to buy houses come from overseas.
In Beijing last year, about 17 per cent of the houses were bought not for own use, but for rent or sale when the prices increased. The figure in Yangtze River Delta cities is as high as 20 per cent.
(China Daily)
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Updated: 2005-08-16 11:41
