China is drawing up a new curb on property developers as part of a host of measures to cool the country’s red-hot property market, the state-controlled China Securities Journal reported yesterday.
The plan would ban developers from investing revenue from pre-sales of uncompleted property developments in new projects, the journal said, citing an unnamed source close to the Ministry of Housing and Urban-Rural Development.
Developers will be required to deposit the income from such advance sales of uncompleted projects into a special account monitored by the government and will only be able to use the money to pay contractors.
PHOTO: AFP
The measure is being drafted by the ministry, the central bank and other government agencies and is aimed at stopping developers using such money to buy and hoard land, the report said.
Chinese authorities have issued a slew of measures in recent weeks as they seek to prevent the property market overheating and derailing the world’s third largest economy.
Prices in major cities rose 11.7 percent year-on-year last month, the fastest since a nationwide survey was widened to 70 cities in July 2005.
The authorities have tightened restrictions nationwide on advance sales of new property developments, introduced new curbs on loans for third home purchases and raised minimum down-payments for second homes.
Separately, the newspaper said that Shenzhen, the boom border city neighboring Hong Kong, would soon limit foreigners and Hong Kong and Macau residents to one apartment purchase until the end of the year.
The city government will also order banks to stop granting homes loans to non-residents who cannot prove they have paid taxes and social security contributions in the city for at least a year, the report said. Banks will be asked to reject mortgage applications for people buying their third property.
Last week, the Beijing municipal government announced similar rules, restricting families to one new apartment purchase.
State media have said China is likely to introduce a property tax on residential housing in the first half of the year on a trial basis in Beijing, Shanghai, Shenzhen, and the southwestern mega-municipality of Chongqing.
Meanwhile, Swire Properties, one of Hong Kong’s biggest developers, has called off its plan to raise more than US$3 billion in a share issue after receiving a lukewarm response, sources said yesterday.
Swire Properties, the property unit of blue-chip conglomerate Swire Pacific, shelved the plan as shares on the Hong Kong stock and property indexes tumbled following China’s moves to tighten credit on the mainland.
“There isn’t sufficient demand from both institutional and retail investors at the price it expects,” a person familiar with the situation told Dow Jones Newswires.
Demand for the developer’s initial public offering has been hit by a fall of more than 5 percent in the Hang Seng Index since the company began bookbuilding on April 26.
The plan was also dragged by concerns over Greece’s debt crisis and China’s announcement on Sunday for banks to raise the amount of money they keep in reserve by 50 basis points to avoid a property bubble.
Swire told a press conference on Sunday that it will offer 910 million shares at a price between HK$20.75 and HK$22.90.
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