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.
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 during 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”, OCBC said in a research note on Monday.
“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 cities climbed an annual 9.2 per cent in August, up from 7.9 per cent in July, according to data from China’s 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 180sqm, according to a notice posted on the local government’s website on Saturday.
In Chengdu, the capital of southwest Sichuan province, prospective buyers will be allowed to purchase only one property in certain city districts, and those buying their second property will need to place a down payment of no less than 40 per cent of the purchase price.
The Chengdu government also said it would penalise developers who were sitting on land without starting construction as promised and would clamp down on rumour-mongering in the property market.
The eastern city of Jinan said residents who owned three properties could not buy more and the increased deposit requirement for first homes to 30 per cent from 20 per cent, among other measures.
Residents of certain parts of the city of Wuhan, in the central province of Hubei, would be required from Monday to make a minimum down payment of 50 per cent to qualify for a commercial loan to buy a second home or 25 per cent for a first home, according to an announcement on a city government website. No loans would be given to residents for third homes.
Non-residents of Wuhan were ineligible for commercial loans for second homes in parts of the city and barred from buying third homes, it said. Home prices in at least one district in Zhengzhou, which became a symbol of China’s property excesses because of rows of empty housing developments, have risen two-thirds this year to 25,000 yuan ($A4890) a square metre on average, a sales manager told Reuters on a recent visit to the city.