China’s eastern cities of Nanjing and Hangzhou raised the minimum down payment required for second homes to 70 percent from 60 percent as more cities tighten property policies because of surging prices.
The cities will continue to ban mortgage lending for third homes and will maintain a 30 percent down payment for buyers of first homes, the central bank’s Nanjing and Hangzhou branches said in separate statements on their Web sites on Tuesday. Nanjing will increase housing land supply by 10 percent from the average in the past five years, the city’s housing authority said in a statement on Tuesday.
About 10 Chinese cities have tightened their property policies in the past month as local governments face pressure to meet annual housing price targets, said Centaline Property Agency Ltd (中原地產), the nation’s biggest real estate brokerage.
Three of China’s four major cities — Shenzhen, Shanghai and Guangzhou — raised minimum down-payment requirements for second-home mortgages to 70 percent from 60 percent, after new home prices jumped the most since January 2011 last month. Beijing did so in March.
“More cities with rapid home-price gains are likely to come out with their local tightening measures,” Qu Anxin, a Shanghai-based researcher at Centaline, said in a telephone interview yesterday. “It’s pretty clear that the central government won’t announce nationwide property curbs because cracking down on the overall property market will hurt the economy.”
New home prices jumped in all but one of the 70 cities the government tracks last month from a year earlier, with the four major cities leading the gains, the National Bureau of Statistics said on Nov. 18. They only declined in Wenzhou.
Former Chinese premier Wen Jiabao (溫家寶) in March stepped up a three-year campaign to contain price gains, ordering cities with excessive increases to raise down payments. China’s 35 provincial-level cities have set annual home price targets this year by mostly capping local income growth.
The local government measures are more “symbolic” rather than having a real impact on the market because second-home buyers only account for about 10 percent of home sales, Qu said.
The northern city of Shenyang and the eastern cities of Nanchang and Xiamen also said on Tuesday they will raise second-home down payments.
Home prices in Nanjing jumped 13 percent last month from a year earlier, while Hangzhou rose 6.7 percent, said SouFun Holdings Ltd (搜房), China’s biggest real-estate Web site owner.