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China's Regulators Plan Tighter Control of Funds Into Property

  • Aims to further rein in speculative funds in real estate
  • Hang Seng Properties Index falls 3%, most in one month

China’s financial regulators plan to further tighten control on funds flowing into the property market in violation of current rules, according to people familiar with the matter. 

Authorities including the central bank, the China Banking Regulatory Commission and the China Securities Regulatory Commission aim to tighten control on speculative real-estate investments and money involved in land transactions, said the people, who asked not to be identified because the information isn’t public. The people didn’t provide further details.

The Hang Seng Properties Index slumped 3 percent as of 2:50 p.m. in Hong Kong, the biggest intraday drop in a month. China Resources Land Ltd. fell 4.1 percent and New World Development Co. dropped 3.8 percent.

The plan comes after the central bank governor highlighted concerns about escalating home prices, and local governments rolled out a raft of tougher curbs during a week-long holiday. Authorities in at least 21 cities have introduced home-buying curbs in recent weeks, ranging from raising down-payments for first and second homes, to ruling some potential buyers ineligible.

The central bank, the banking, and securities regulators didn’t immediately respond to faxes seeking comment.

Tougher Curbs

The government has focused on fast-rising housing prices in some cities, while taking measures to ensure robust property-market growth, central bank Governor Zhou Xiaochuan said on Oct. 6 in Washington.

Beijing last month increased down-payments for first-time home buyers to a minimum 35 percent, the highest level among China’s biggest cities. Shenzhen’s measures include a minimum 70 percent down-payment for second properties and restrictions on non-residents. Shanghai, China’s financial hub, on Oct. 7 announced a step-up in monitoring house prices, including watching for unapproved price increases in new developments.

Home prices in the world’s most populous nation rose the most in six years in August, suggesting the curbs have yet to deter buyers, the latest official data show. While gains have been most pronounced in large cities such as Shenzhen, where home prices are up about 60 percent in the past year, smaller cities such as Xiamen have also seen runaway growth, with prices jumping more than 38 percent.

— With assistance by Emma Dong, and Steven Yang

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