Guangdong probes firms giving credit to property buyers

Homebuyers at the sales center of a property project in Shenzhen, Guangdong province. [Photo/CFP]

The two largest cities in Guangdong province have launched an investigation into the credit channels that support housing down payment amid concerns over surge in property prices, reported China Business News on Wednesday.

The credit covering Shenzhen homebuyers' down payment could be as large as over 2 billion yuan ($306.9 million) through small loan companies and peer-to-peer (P2P) lenders, said the newspaper citing initial result of the probe.

Guangzhou, capital city of Guangdong province, is also inspecting the leverage condition of down payment, and some local banks have either lowered mortgage amount or shut out applicants with poor credit rating, sources told the paper.

Compulsory measures will be taken in next step to stem the down payment financing, it said, as such loans are believed to be a major reason behind recent unexpected spike in property prices.

The Shenzhen Financial Office declined to give any detail on the probe, while some P2P products lending directly to home buyers have already been removed, according to the paper.

Chinese regulators are planning to impose new rules to end such practice amid concerns about the rising risks in the loan and property market in some first-tier cities, reported Bloomberg.

Home prices in the country's 100 big cities climbed 0.6 percent in January, according to a survey by the China Real Estate Index System released earlier the month.

The average price of a new property surged 5.25 percent to 11,092 yuan per square meter, with 61 cities recording month-on-month growth in prices, indicating a warm-up in demand.

Zhong Nan contributed to this story.