Government and Policy

China gets tougher on second home purchase

(Xinhua)
Updated: 2011-01-26 21:47

File photo taken on Nov 14, 2010 shows a newly built residential community in Shanghai. [Photo/Xinhua]

BEIJING - The Chinese government Wednesday raised the minimum down payment requirement for the purchase of a second home to 60 percent of the property's value, previously set at 50 percent, to curb property market speculation.

The decision was announced in a statement released after an executive meeting of the State council, China's Cabinet, which was presided over by Premier Wen Jiabao.

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For certain cities, a second home will not be available to families without permanent residences in the city and with at least one home in the same city.

Also, families are suspended from buying any homes in cities if they have not been long-time residents and can not provide tax or social insurance certificates to show their length of residence.

Further, tax policies will be tightened in property purchases, the statement said.

The statement said local branches of the People's Bank of China, or central bank, will be permitted to raise down payment ratios and interest rates for second-home buyers based upon different targets and requirements in local governments.

The drastic growth momentum had been initially cooled after the State Council in April last year issued measures to check soaring prices in certain cities, and further measures will be carried out to cement these controls, the statement said.

Local governments will be responsible for the stable and healthy growth of property markets and are required to publicize, before the end of March, the annual "controlled" price targets of newly-built homes, the statement said.

The targets should be set based upon local governments' economic development targets, disposable income growth and residents' housing affordability, the statement said.

Also, more efforts should be made to promote projects for indemnifying housing, the statement said.

Further, local governments will add effective land supplies, the statement said.