Chinese Cities Introduce Curbs to Cool Overheated PropertyBloomberg News
Several cities imposed tightening measures over three days
Higher down payments, purchase limits among new measures
Local governments in nine Chinese cities tightened rules for home purchases over the past three days in a bid to damp resurgent demand and rein in excessive speculation.
Beijing, Chengdu, Hefei and Suzhou are among Chinese hubs that have implemented curbs to cool home prices. Authorities in those metropolitan areas introduced measures ranging from raising down-payment requirements for both first and second homes to ruling some potential buyers ineligible.
Home prices in the world’s most populous nation rose the most in six years in August, defying new policies to curb excessive speculation in big cities and government warnings about asset bubbles. While gains have been most pronounced in big cities like Shenzhen, where home prices are up about 60 percent in the past year, smaller centers such as Xiamen have also seen runaway growth, with prices soaring more than 38 percent.
“There will not be a holistic plan to address the property market,” Iris Pang, senior economist for Greater China at Natixis SA in Hong Kong , said on Saturday. “Local governments are the ones who will work out their own measures.”
Sichuan’s provincial capital Chengdu and Henan’s provincial capital Zhengzhou on Sunday banned people from buying a third property in some areas. Wuxi, a southern manufacturing base close to Shanghai, raised down-payment requirements for second homes to a minimum of 40 percent of the property’s value, from 30 percent previously.
Capital city Beijing on Friday increased down payments for first-time purchasers to a minimum of 35 percent of the selling price, the highest level among China’s biggest cities. Adjacent Tianjin banned non-locals from buying second properties, while southern Suzhou said it would warn developers if prices were “notably” higher than costs plus a reasonable profit. And Shandong’s provincial capital, Jinan, increased down-payment requirements on first homes to 30 percent from 20 percent in select areas, and on second residences in those places to 40 percent from 30 percent, according to the official Xinhua News Agency.
Apart from increasing down-payment thresholds, the eastern city of Hefei banned local residents from buying a third residence and restricted non-local residents from owning more than one property. Wuhan, the capital of Hubei, raised down-payment requirements for first homes to 25 percent from 20 percent and tightened rules for purchases of second homes.
Investment in the real-estate sector may retreat in the first half of next year as the new curbs take effect, Wen Bin, a Beijing-based researcher at China Minsheng Banking Corp., said Saturday.
— With assistance by Yan Zhang, Miao Han, and Emma Dong