From the beginning of this year, real estate enterprises have felt the increasing brunt of tightened financing channels. Both the difficulty and the cost of financing have put major on the pressure on their capital departments, Yicai.com reported.

A senior housing executive told Yicai.com that investors are very cautious and reluctant to finance real estate developers, even though some of them have increased their financing cost — the payment they will have to make to investors — to 15%.

Previously, most housing developers were used to front-end financing, which means to launch a housing project, developers only had to put up 30% of the funds and get the remaining 70% from financial institutions, such as a trust or asset management plan, even before they successfully bid for the land. However, front-end financing has almost been eliminated.

In terms of real estate development loans, banks have basically no credit. China Construction Bank and China CITIC Bank told Yicai.com that they have not helped developers for loan financing for a long time.