Tue, Oct 04, 2016 - Page 11 News List

Chinese cities introduce rules to curb rising prices

NEXT BIG THING:Many mid-tier cities have become the targets of property speculators, who are looking for profits outside of major cities as home prices surge

Reuters, SHANGHAI

Four Chinese cities have announced new restrictions on property purchases as the government tries to cool soaring home prices stoked by property speculators in second and third-tier cities across the country.

The measures in Chengdu, Jinan, Wuhan and Zhengzhou were the latest in a string of steps to tighten credit flowing into the property sector as the government tries to balance the need to prevent bubbles while stimulating economic growth.

The spate of tightening measures over the past two weeks “shows that China’s top level may have reached consensus that the concerns about overheating in property market may have overshadowed the concerns about the economic slowdown,” Singapore-based Oversea-Chinese Banking Corp Ltd (華僑銀行) said in a research note yesterday.

“The shift of policy tone also shows that China is unlikely to stimulate the economy further aggressively. This may not bode well for market sentiment in the longer run,” it said.

Many mid-tier Chinese cities have become targets of property speculators looking for the next big thing beyond China’s major cities. Other cities, such as Tianjin, Hefei and Suzhou, have also recently rolled out countermeasures to limit purchases as home prices jump.

The average new home price in 70 major Chinese cities climbed an annual 9.2 percent in August, up from 7.9 percent in July, according to data from the Chinese National Bureau of Statistics.

Residents of the inland city of Zhengzhou who already own two properties and nonresidents who own one will now only be able to buy homes larger than 180m2, according to a notice posted on the local government’s Web site late on Saturday.

In Chengdu, the capital of southwest Sichuan Province, prospective buyers would only be allowed to purchase one property in certain city districts, and those buying their second property would need to place a down payment of no less than 40 percent of the purchase price, the local government said.

The Chengdu government also said it would penalize developers who were sitting on land without starting construction on time as promised and would clamp down on rumor-mongering in the property market.

The eastern city of Jinan on Sunday said that residents who already owned three properties could not buy more and increased down payment requirements for those buying their first home from 20 percent to 30 percent, among other measures detailed in a document on the government’s Web site.

Residents of certain parts of the city of Wuhan, in central Hubei Province, from yesterday are required to make a minimum down payment of 50 percent to qualify for a commercial loan to buy a second home or 25 percent for a first home, according to an announcement on a city government Web site.

Nonresidents of Wuhan are ineligible for commercial loans for second homes in parts of the city and barred from buying third homes, it said.

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