Information about Brazil.Select the subjects you want to know more about on JournalolemeChinese property developers, including indebted Evergrande, run a business that relies on selling apartments before they are completed.Pictured is the Evergrande development in Beijing on January 6, 2022.BEIJING - China's housing market urgently needs a confidence boost, analysts said, after reports of homebuyers halting mortgage payments jolted bank shares and heightened fears of a systemic crisis.The volume of mortgages is not as worrisome as the effect of recent events on demand and prices for one of China's biggest financial assets: housing.“It is critical for policymakers to quickly restore confidence in the market and break the potential negative feedback loop,” Goldman Sachs chief China economist Hui Shan and his team said in a report on Sunday.Last week, the rise in homebuyers interrupting mortgage payments prompted several Chinese banks to announce that their exposure to these loans was lower.But the bank's shares fell.Homebuyers protested the delay in building their Pago apartments before completion, as is customary in China.Left alone, more homebuyers may stop paying their mortgages, [further] strains real estate developers' cash flows, The Goldman report said the matter could, in turn, lead to further construction delays and halt the project .Analysts said the uncertainty "is discouraging families from buying homes from those developers who arguably need sales the most."After two decades of explosive growth, real estate developers in China are finding it difficult to stay afloat amid Beijing's crackdown on heavy corporate reliance on debt for growth.Indebted developers like Evergrande Group I stumbled on late last year.Developers' ongoing financial woes, coupled with Covid restrictions, have delayed construction projects, prompting homebuyers to compromise their financial credit by suspending mortgage payments.The number of real estate projects included more than tripled in just a few days to more than 100 on July 13, according to Jefferies.Analysts said this represented 1% of China's total mortgage balance.At banks covered by Goldman Sachs, average exposure to property, including mortgages, was just 17%, the company's financial services analysts wrote in a report last week."We see mortgage risk more related to households' desire rather than their ability to make mortgage payments, as developers have delayed property construction due to refinancing difficulties," the report said.But if more buyers refuse to pay their mortgages, the bad feeling will drive demand – and in theory prices – down in a vicious cycle.This has led to calls for confidence-building.“In the second half of 2022, there is no hope for a rapid recovery in the real estate sector and it will continue to drag economic growth,” said Gary Ng, chief economist at Natixis CIB Asia Pacific.“The antidote is to boost homebuyers and developers’ confidence again, but it has proven to be a difficult task.”Qin Gang, deputy director of the China ICR Real Estate Research Institute, said stopping mortgage payments is an extreme measure that should not become common practice, especially as there are legal procedures in place to resolve delays in the completion of apartments.He cited conversations with industry executives saying that reports of suspended payments are not very conducive to sustaining the housing sector's recovery.Typically, if developers fail to deliver apartments within the agreed time frame, buyers can request to terminate their purchase contracts, real estate analysts at Goldman Sachs said in a report last week.Analysts said approval typically takes three months and the developer will need to return the down payment and completed mortgage payments to the home buyer, including interest.The remainder of the mortgage payments must go to banks, the report said.Demand for new homes has already fallen.A quarterly survey conducted by the People's Bank of China in June found that only 16.9% of residents plan to buy a home in the next three months, the lowest level since 16.3% in the third quarter of 2016.Earlier this year, the central bank took an important step to boost the housing market by lowering the mortgage rate.Many cities have eased their policies in recent months to support home purchases.But since April, home sales have dropped 25% or more from last year's levels, according to data from Wind Information.The average price barely rose in 100 Chinese cities last year, although prices in major cities like Beijing and Shanghai rose by double digits, reflecting the difference in demand, according to Wind Information.Any policy that could guarantee home delivery would be beneficial, said Bruce Pang, chief economist and head of research for Greater China, JLL.He said banks have limited exposure to unfinished construction projects and have the potential to restore market confidence.Dai Xianglong, former chairman of the People's Bank of China, said on Saturday that China will face nothing like the 2007 US "subprime mortgage crisis", he suggested measures to boost confidence in the housing sector and stabilize housing prices.This is according to a government media report.But even with state support Last week, the Securities Times raised the specter of systemic financial risk. In an article, it encouraged local governments and developers to deliver homes on time."Credit losses related to mortgage loans are minimal and affected balances are small at most Chinese domestic banks today," Harry Hu, senior managing director at S&P Global Ratings, said in a statement.“But downside pressure could mount if the recent suspension of mortgage payments by some groups residing in China is not managed well and manifests itself in systemic risks,” Hu said.On Sunday, the official newspaper of China's Banking and Insurance Regulatory Authority published similar notices and requested to support the delivery of apartments and finance the real estate sector.Without a real estate slump, China's gross domestic product could have grown 3% in the second quarter, up from the 0.4% growth reported on Friday, according to an analysis by Goldman Sachs.“Music aficionado.Player.Alcohol practitioner.Professional reader.Web Scholar.”Your email address will not be published.Mandatory fields are marked with *Save my data in this browser for the next time I comment.