The number of Chinese property developers going out of business has gone up by half. So far this year, 274 builders have filed for bankruptcy, a rise of 50% from a year ago, according to the website of the People’s Court Daily. A recent high-profile example was Yinyi Group, a developer in the Chinese port city of Ningbo, which filed for bankruptcy reorganization in June after it failed to pay back CNY300 million in debt issued three years ago. Although the numbers are only a tiny fraction of the estimated 100,000 developers in China, concern is growing that defaults and bankruptcies will only increase.

“Everyone, from home buyers to savvy investors, is worried about developers’ cash flow,” said Yan Yuejin, Research Director with Shanghai-based property services firm E-House China R&D Institute. Home builders have found it harder and harder to access their traditional sources of credit as the authorities clamp down on high debt levels. In May, the China Banking and Insurance Regulatory Commission (CBIRC) banned direct financing to developers who have not yet secured all the approvals necessary to start building or who have not secured all the funding they need for a project. The ban was later expanded to include indirect financing through equity investments and bond subscriptions. Additionally, the National Development and Reform Commission (NDRC) said that any new offshore bonds issued by real estate firms must be used only to replace medium- and long-term offshore debt maturing in the next year. Previously, developers could use offshore debt issuance proceeds to refinance existing debt, both onshore and offshore, and for general corporate purposes.

“The government is determined to reduce risks in the financial system, and maintaining stability amid a deteriorating economy is the key mission,” said Joe Zhou, Executive Director of CBRE. He said that if highly leveraged developers were allowed to continue borrowing money, bidding for land and selling homes, they would soon be unable to pay their debts. That would soon leave them unable to finish or hand over vast numbers of homes that have already been sold, causing a public outcry. “That is the last thing the government would like to see now,” said Zhou. Yan at E-House added that credit control policies in the sector have been tightened 15 times this year alone, with more to come, leaving China’s builders little room to obtain fresh loans in the second half of the year to refinance the debt they borrowed earlier.

More than 500 domestic bonds worth a total of CNY530 billion raised by Chinese home builders will mature this year, up 30% from 2018, the South China Morning Post reports.