Mortgages, Developers and Property Prices

15 Pages Posted: 13 Mar 2018

See all articles by Michael K.F. Chui

Michael K.F. Chui

Bank for International Settlements (BIS)

Anamaria Illes

Bank for International Settlements (BIS)

Christian Upper

Bank for International Settlements (BIS)

Date Written: March 11, 2018

Abstract

This special feature studies the risks posed by the rapid rise in property developer debt in several Asian economies in recent years. Gradually, the firms involved are shifting away from traditional bank loans and choosing to issue debt securities, often in foreign currency. So far indebtedness has tended to be low for most firms, but weak profitability and declining interest coverage ratios give cause for concern. The firms are thus vulnerable to shocks, such as increases in interest rates, falling property prices or local currency depreciations. Even if outright defaults can be avoided, the weakening fundamentals of the sector could spill over to other parts of the economy through lower house prices.

JEL Classification: E40, F20, F30, F34, F41, F65, L85

Suggested Citation

Chui, Michael K.F. and Illes, Anamaria and Upper, Christian, Mortgages, Developers and Property Prices (March 11, 2018). BIS Quarterly Review, March 2018, Available at SSRN: https://ssrn.com/abstract=3139214

Michael K.F. Chui (Contact Author)

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Anamaria Illes

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Christian Upper

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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