HONG KONG: China has urged financial institutions to help local governments stabilise the rapidly-cooling housing market and protect the rights of some home buyers, another signal that authorities are worried about fallout from the debt crisis at China Evergrande Group.

       At a meeting chaired by central bank governor Yi Gang, authorities told financial institutions to cooperate with governments “to jointly maintain the steady and healthy development of the real estate market and safeguard the legitimate rights and interests of housing consumers,” according to a statement by the People’s Bank of China (PBoC).

       The meeting, also attended by officials from the country’s banking and securities regulators, the housing ministry and executives from 24 banks, also called for “accurately grasping and enforcing the prudential management system of real estate finance around the goal of ‘stabilising land prices, house prices and expectations,’” the PBoC said.

       The statement echoed the PBoC’s vow two days ago to ensure a “healthy property market” and protect home buyers’ rights, as struggling property giant Evergrande is on the brink of collapse, threatening to leave 1.5 million buyers waiting for finished homes.

       Citigroup Inc estimated that about 41% of China’s banking system assets were either directly or indirectly associated with the property sector by the end of last year, and any decline in prices may lead to a knock-on effect on banks’ asset quality.

       Chinese banks have an estimated 50.8 trillion yuan (US$7.9 trillion or RM33.09 trillion) of outstanding loans to developers and homebuyers.

       The government has been steadily tightening restrictions in the property market to rein in financial risks, reducing demand from developers for land auctions while curbing investment and economic growth.

       Some analysts, including those at Huatai Securities Co Ltd, have said regulators may fine-tune policies if property prices start to fall, with possible options including looser mortgage loan quotas. Regulators may also ensure troubled developers deliver on pre-sold homes, they said.

       The latest PBoC meeting may signal that authorities might consider a “marginal adjustment” of real estate credit policy to ensure people with real needs for housing get loans, according to a report carried on the wechat account of the official Securities Times yesterday, citing some analysts.

       The PBoC reiterated in the statement on Wednesday that it will not use the housing market as a tool to stimulate the economy for short-term growth and will stick to the long-standing government principle that “housing is for living, not for speculation”.

       Sounding a note of caution over speculation about a new round of property credit easing, the state-run Economic Daily said in a commentary Wednesday that China should not loosen its property tightening policies just because some real estate developers are running into trouble. ― Bloomberg