New curbs on housebuyers

More cities follow Beijing's example with deposit hikes and bans on extra homes

Local governments in nine Chinese cities have announced new restrictions on property purchases, designed to dampen speculative buying and curb soaring prices.

Tianjin, Suzhou, Zhengzhou, Chengdu, Jinan, Wuxi, Hefei and Wuhan followed an announcement made in Beijing on the night of Sept 30.

They introduced measures to cool market, such as raising down payment requirements for second homes or banning the purchase of second and third homes.

In the past few months, average prices of commercial residential property in the cities have registered double-digit increases.

In August, Zhengzhou, in Henan province, saw the country's fastest monthly surge in the prices of new commercial residences and pre-owned homes.

According to the National Bureau of Statistics, the average price of new homes in 70 major cities rose 9.2 percent year-on-year in August, from 7.9 percent in July. More than 90 percent of the cities saw prices rise on a monthly basis.

Industry experts say cities, including Fuzhou, Dongguan, Zhuhai, Shijiazhuang and Qingdao, where home prices have seen runaway growth, are also likely to tighten rules for home purchases.

Yan Yuejin, research director of a think tank at the E-House China R&D Institute, a real estate research agency, says the new policies will restrain overheating home prices in some popular areas, and housing transactions in some cities are likely to fall in the second quarter of next year. However, prices are not likely to see substantial declines because of the shrinking property inventory and land supply, along with swelling urban populations, Yan said.

On Oct 3, as part of its efforts to curb speculation, the Ministry of Housing and Urban-Rural Development issued a list of 45 housing developers and agents accused of hoarding, price-rigging and other malpractices.

The Beijing government on Sept 30 announced that down payments for first-time homebuyers should be no less than 35 percent, up from the previous level of 30 percent, while those for purchases of second homes should be no less than 50 percent.

Land supply for so-called self-use houses, which are sold to qualifying families at a price capped by the government, will be increased, the government said.

"These measures (in Beijing) will affect potential buyers who are keen to buy a better house by enhancing the investment threshold and utilizing financial leverage," says Guo Yi, marketing director at the Yahao Real Estate Selling and Consulting Solution Agency in Beijing.

Before the new regulations, the down payment requirement for pre-owned houses in Beijing had reached 40 to 60 percent of the total price, Guo says, adding that the proportion may rise to 50 to 70 percent under the new policy, which would greatly reduce demand for pre-owned housing.

Fan Hui, 32, a private business owner, bought an 80-square-meter two-bedroom apartment in Beijing's Chaoyang district in June. "I am very lucky because the price has risen by more than 1 million yuan ($150,000; 134,000 euros) in the three months since I bought it," Fan says.

fanfeifei@chinadaily.com.cn

(China Daily Africa Weekly 10/07/2016 page14)