Value of personal housing loans China 2015-2023

In 2023, the value of personal housing loans in China amounted to 38.17 trillion yuan, representing a slight drop of 1.6 percent compared to the previous year. The overall value of outstanding mortgages more than doubled between 2016 and 2021 before it plateaued afterwards.

A key factor to the growth of the real estate market

China's personal housing loan market emerged in the 1990s in tandem with the marketization of the country's real estate sector. Its subsequent expansion also mirrored the growth in the property industry. Thanks to the dramatic rise in home prices across China since the early 2000s, substantial capital has poured into the market through real estate development loans and personal housing credits. For almost two decades, many Chinese middle class citizens accumulated their personal wealth through the considerable appreciation of their properties, which they financed with the help of mortgages.

Risks

The persistently high level of outstanding personal mortgage is becoming increasingly concerning amidst China’s current economic and market situation. With the country’s economic slowdown and the oversupply in the property sector, the housing market is losing steam, resulting in elevated risks of bad debts to financial institutions. At the same time, the household debt in China is now staying above 60 percent of the country’s GDP, undermining the ability to consume and invest in the Chinese population.