In Shanghai, the new rules stipulate that local families who already own one property and are planning to buy a second one are required to pay at least 50 percent down payment. (Photo : Getty Images)
To help ease soaring home prices, Shanghai and Shenzhen have introduced a set of new restrictions, according to an article by China Daily. They are the first among major Chinese cities to announce such a move, but analysts are wary of its efficiency.
For most analysts, addressing the imbalanced supply and demand in the cities' real estate markets would be a more proper solution.
"The measures taken by the government will reduce transaction volumes and cool price growth but the appetite for housing stock will keep prices firm," said James Macdonald, research head at Savills China. "Investors are unlikely to sell as there are few alternatives for their money, while end-users are unlikely to sell either."
In Shanghai, the new rules stipulate that local families who already own one property and are planning to buy a second one are required to pay at least 50 percent down payment.
If the second home is larger than 140 square meters or priced over 4.5 million yuan, the minimum down payment required will increase by 70 percent. An additional factor is if the property is located in the center of Shanghai.
Meanwhile, families without any permanent residency permits will have a harder time purchasing real estate. Under the new set of rules, such home buyers are required to pay taxes for at least five consecutive years before actually buying real estate in Shanghai. It's a tighter rule compared to the old one, which only required two years of tax payments.
Shenzhen locals, on the other hand, must pay at least 40 percent of the actual home price as down payment for their second home. Non-local families are allowed to buy one apartment after paying taxes for three consecutive years.
"There is an escalating difference in home price growth, because first-tier and some popular second-tier cities grow much higher than other cities, and this difference has been carried on," said Liu Jianwei, a senior statistician from NBS, in an interview with China Daily.
Both of the rules were announced by the respective local governments on Friday, March 25.
The cities of Wuhan in Hubei Province and Nanjing in Jiangsu Province also introduced stricter regulations regarding mortgage loans on the same day.
