The move is in line with government efforts to ease the impact of a property industry cash crunch on the housing market. Separately, Bloomberg reported this week that regulators are considering lifting some restrictions on developers’ access to cash from presold properties tied up in escrow accounts. The housing ministry and banking watchdog may convey the instructions through window guidance to local governments later this month, people with knowledge of the matter said.
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Chinese regulators asked local authorities to ensure home building isn’t obstructed by creditors’ requests to freeze engineers’ resources held retained records. The supreme court, housing ministry and central bank gave a joint notice last week calling on local governments to ensure continues from home presales can be removed from supervised records for project construction whenever endorsed, even after they have been frozen by courts. A copy of the Jan. 13 notice was posted on the WeChat record of Xiangyang city’s real estate affiliation.
Court-ordered asset freezes, including on proceeds from residential project sales, have grown more common as the widening liquidity squeeze makes it harder for developers to pay their bills. Yet such moves may hamper project construction if suppliers and migrant workers aren’t paid.
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“It shows that China prioritizes project construction and completion over the traditional court practice to freeze assets,” said Yan Yuejin, research director at E-house China Research and Development Institute. “Ensuring property projects won’t be abandoned is at the heart of regulatory moves to resolve property debt problems.”
Maintaining construction and delivery of homes is key to reviving buyer confidence, which has been hurt by widespread project halts at companies including China Evergrande Group. A property market slump persisted on all fronts in December, with sales, prices and investment falling despite regulatory efforts to ease some restrictions on real estate funding.