BEIJING (Reuters) – Two months after many Chinese homebuyers stopped paying their mortgages in protest of stalled construction on their properties, a lack of progress in more locations now threatens to intensify the boycott, despite assurances from authorities.
The mortgage protest has become a rare act of public disobedience in China, and it was prompted by social media in late June and forced regulators to scramble to offer homebuyers loan repayment holidays of up to six months and pledges to speed construction.
But with no sign of construction starting on many projects and no clear guidance from local authorities, more homebuyers told Reuters they plan to join others who have stopped paying mortgages.
In the central city of Zhengzhou, Wang Wending said he was allowed to defer mortgage payments on his apartment for six months in late July.
However, he will have to pay the outstanding installments in one go when the moratorium ends, regardless of the state of construction, which has not yet begun.
“What will we do if there is still no resumption of construction after six months? We will stop all payments directly,” he said.
Homebuyers in at least 100 cities have threatened to halt mortgage payments since late June as developers stop building projects due to funding tightness and severe COVID-19 restrictions.
The threat of a further mortgage boycott comes as China prepares to hold a Communist Party congress next month, focusing on efforts to revive an economy that has been plagued by the property crisis.
While social media censorship has blocked messages and erased videos of the protests, keeping them out of the public spotlight, the boycott has expanded nonetheless.
A widely watched list on open source GitHub titled “We Need Home” showed the number of projects across China whose buyers joined the boycott at 342 on September 16, up from 319 in late July.
“The government is focusing on social stability and has not thought about solving the problem of incomplete projects,” said Qi Yu, a homebuyer in the southeastern city of Nanchang. “There is nothing we can do if the government does not help us.”
Qi has not provided a 1 million yuan mortgage service since July.
The Zhengzhou and Nanchang governments did not respond to faxed requests for comment.
Informed sources told Reuters that the authorities in Zhengzhou, the epicenter of the protest, pledged to start building all stalled housing projects by October 6.
The sources said the city will use private loans and urge developers to return the money and embezzled real estate companies to file for bankruptcy.
The mortgage boycott has heightened concerns about a prolonged slump in China’s property market, which has moved from crisis to crisis since mid-2020 after regulators intervened to reduce leverage.
Beijing has unveiled measures that include lowering borrowing costs and helping local governments set up rescue funds to support the property market.
Although this is certain for some homebuyers, others say they have been forced into silence amid a crackdown on dissent.
In Zhengzhou, 30-year-old Ashley, who only gave her first name, said that while construction on her apartment resumed in the second quarter, only a few people were working on the site, she thought, “to please the homeowners.”
Ashley told Reuters she and other homeowners were warned not to travel to Beijing to protest after the Zhengzhou government repeatedly canceled meetings with homebuyers.
“I received a call from the police this week, and they asked me not to go around them to protest to the higher authorities,” she said. “They said anything I should speak to the local government first, and if they can’t solve the problem they can send the message to us.”
Ashley showed Reuters a phone record that police called 15 times in one day earlier this month. The Ministry of Public Security in Zhengzhou declined to comment.
Natixis said in a report last month that loans worth 2.3 trillion yuan ($43.02 billion) are at risk if all unfinished projects end up being boycotted.
Sources said Beijing has set up a rescue fund of up to $44 billion and $29 billion in special loans for unfinished projects to restore confidence.
However, sources in property developers and banks said it may take time for these funds to make a difference.
“There will be no money for everyone,” said a senior executive at a Shanghai-based development company.
A homebuyer at Evergrande Group’s Chinese development in Hefei said he was due to take delivery of his apartment in 2020, but construction has stalled for the past four years.
The home buyer, who declined to be named, said buyers on the project began protesting last year and joined the wider boycott in June.
Evergrande said company president Hui Ka Yan pledged in an internal meeting last week to return all construction work to normal by the end of September.
Of the 706 projects for Evergrande, 38 have not resumed construction, while only 62 have now restarted.
“We won’t pay off our mortgages again if we don’t see any physical results,” the person said, adding that partial construction resumed in late August with only about 20 workers.
“We will continue to protest – we will go to Beijing.”