"There are more potential risks in the real estate market and some small and medium-sized financial institutions are exposed to risks," Li said in the government's work report for 2023.
Since mid-2021, the property sector has grappled with a liquidity crisis, with many developers defaulting on, or delaying, debt payments as they struggle to sell apartments and raise funds. Around half of the 30-odd Chinese developers listed in Hong Kong have defaulted on or delayed bond payments. "There are many risks in real estate for homebuyers and property developers, such as buyers' threat of stopping mortgage repayments, failure to deliver pre-sold homes and default on debt by developers, which indicates a lack of consumption power and confidence," said Yan Yujin, analyst at E-house China Research and Development Institution. "Only when consumer demand for housing is boosted can other real estate problems, including the problem of financial risks of leading housing companies, be truly resolved."
Premier Li said the government would resolve housing issues for young people and support the needs of homebuyers.
China also insists that "housing is for living, not for speculation," according to a separate report by the state economic planner, though Li did not mention it in the government 2023 work outlook.
China will ensure developers deliver pre-sold properties and
expand the supply of affordable rental housing, the planner
said.
In 2022, cash-strapped real estate firms stalled
construction of many presold properties, triggering hundreds of
buyers across the country to threaten to stop making mortgage
payments, in a rare show of public discontent.
The property market showed some signs of recovery in recent
weeks, as home prices rose in January for the first time in a
year, helped by aggressive support given by the government late
last year and the removal of COVID controls.
Buyers remain cautious, however, hampering chances for a
sustained rebound.
An index tracking China's real estate shares has risen 2.5% so far this year, lagging the 7% gain in the
benchmark CSI300 Index , while an index for Hong
Kong-listed mainland property developers has lost
roughly 3%, reflecting the market's similarly cautious outlook.
(Reporting by Liangping Gao, Ryan Woo and Samuel Shen; Editing
by Simon Cameron-Moore)
