Prospective buyers look at an estate plan by a local developer at a property exhibition in Shanghai. (Photo : Getty Images)
New restrictions on property purchases were imposed by four Chinese cities as the government tries to curb the rising home prices caused by property speculators in second- and third-tier cities in the country, Reuters reported.
The new measures in Chengdu, Jinan, Wuhan and Zhengzhou are part of government efforts aimed at limiting the flow of credit into the property sector to prevent bubbles while encouraging growth.
At least 45 property developers and intermediaries have been investigated and charged by the Ministry of Housing and Urban-Rural Development for pushing speculation through false advertising, spreading rumors and violating pre-sale rules, the Xinhua News Agency reported.
These new measures "show 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," according to OCBC, a consulting firm.
"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," the OCBC research note said.
Property speculators who are looking for growth beyond the major cities are targeting many mid-tier Chinese cities. But other cities such as Hefei, Suzhou and Tianjin have also implemented similar counter-measures to limit purchases as home prices increased.
Data from the National Bureau of Statistics show that the average new home price in 70 major cities in the country rose an annual 9.2 percent in August, from 7.9 percent in July.
A notice posted on the website of Zhengzhou local government on Saturday, Oct.1, said that residents of the city who already own two properties and non-residents who own one will now only be able to buy homes larger than 180 square meters (1,938 square feet).
In at least one district in Zhengzhou, home prices have risen two-thirds this year to 25,000 yuan ($3,747.56) per square meter on average, a sales manager told Reuters.
Meanwhile, in Chengdu, the local government said that buyers will only be allowed to purchase one property in certain city districts, and those buying a second property will have to pay the down payment of not less than 40 percent of the purchase price.
The local government also said that it would charge developers who do not start construction on time as promised and would crackdown on those spreading rumors in the property sector.
In Jinan, the local government announced on its website on Sunday, Oct.2, that residents who already own three properties will no longer be allowed to buy more and for those buying their first home, the down payment has been increased from 20 percent to 30 percent.
In Wuhan, in the central province of Hubei, residents would be required starting Monday, Oct.3, to make a minimum down payment of 50 percent to qualify for a commercial loan to buy a second home or 25 percent for a first home, according to the city government website. Residents applying for third homes will not be granted loans. Non-residents of Wuhan will not be given commercial loans for second homes in parts of the city and will not be allowed to buy third homes, it said.
