Chinese mortgage boycotts on unfinished buildings have spread to hundreds of places — Radio Free Asia

The number of Chinese homebuyers boycotting their mortgage repayments to protest unfinished buildings has spread to more than 300 locations across the country, according to a GitHub page documenting the action.

Mortgage boycotts are being staged by property buyers at 12 unfinished projects in the southwestern megacity of Chongqing, seven in Shanghai, eight in Guangdong province, nine in Nanning and 10 in Taiyuan, along with hundreds of other locations reported across China, reports posted by homebuyers to the WeNeedHome GitHub page posted.

Buyers have been left dry after buying apartments off-plan, or before completion, only to find developers tearing down tools and abandoning half-finished buildings they once hoped to call home or use as an investment.

Now they are increasingly banding together and issuing “mortgage suspension notices” to lenders, with both sides calling on the government to act on their behalf.

“In an attempt to maintain payments, buyers repeatedly visited relevant government departments and agencies in charge of seeking assistance and advocating for our rights,” wrote a statement released by apartment buyers in an unfinished complex in Lüshunkou district in Dalian. .

“But there doesn’t seem to be any sign that work will ever start again on the development,” he said.

Another statement from buyers in Hantou County, Changde City said, “We were forced to stop mortgage payments due to the huge losses suffered by the majority of buyers.”

Meanwhile, a statement from buyers in the northern city of Taiyuan accuses banks of fueling the crisis by illegally transferring loans to developers, refuses to make new monthly repayments until buildings are completed and calls for an end to “punishments” for property developers. buyers who take such action.

Xie Tian, ​​a business studies professor at the University of South Carolina, said the move could have a serious impact on China’s economy.

“The suspension of mortgage repayments can lead to systemic financial problems…because of the large sums of money involved,” Xie told RFA. “Also, they are middle-class people who have money and assets.”

Children play basketball outside a building complex of Chinese real estate developer Evergrande in Beijing, July 28, 2022. Credit: AFP

Decline in investments

China’s National Bureau of Statistics released data on August 15 showing a 6.4% drop in real estate development investment between January and July this year, with blue real estate investment falling 12.3% year-on-year in July.

Newly launched projects fell 45.4% year-on-year, the biggest drop since February 2013, and loans to developers from Chinese banks fell 36.8% in July, Reuters reported.

US-based financial journalist Wang Jian said rumors had been reported that the Chinese government would help banks provide loans to developers to complete the buildings, but so far they had not. yet been corroborated.

“There are several problems to solve here, because they cannot accidentally bury the banks, which carries a lot of risk,” Wang said. “On the one hand, you have private buyers, victims of the unfinished building crisis, and on the other, the banks.”

“If they lend more money to developers, it could create more bad debts and a possible collapse [in the banking system],” he said.

“The only solution [for buyers] is to boycott mortgage repayments and force suspension of mortgages, which will also drag commercial banks into the water,” Wang said.

“If this continues, commercial banks will collapse, because that’s where the money comes from in the first place.”

And buyers aren’t the only ones protesting.

On August 2, a group of property developers in the eastern city of Hefei called on the local government this month to crack down on what they described as “malicious protests” by homebuyers, Reuters reported.

The letter is one of the earliest known efforts by developers banding together to repel the growing revolt of homebuyers, who have threatened to stop paying mortgages on hundreds of unfinished housing projects, the agency said.

He quoted a promoter as saying the government “stepped in” and held meetings with both sides after the letter.

Translated and edited by Luisetta Mudie.

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