China's Shenzhen toughens home-buying rules as prices surge

BEIJING (REUTERS) - China's southern city of Shenzhen will raise minimum downpayments on second home purchases to 70 percent from 60 percent, the official China Securities Journal has reported, the latest local move to curb property prices.

Many Chinese cities are seeing record home prices, adding to the risk of a property bubble in the world's second largest economy. Home prices in Shenzhen, which rose 19.7 percent in September from a year earlier, are among the highest.

Shenzhen's move came after Beijing, the capital, tightened measures last month while vowing to boost supply for middle-income families and punish property speculators.

The new rule in Shenzhen will take effect on Wednesday and apply to home buyers who want to take mortgages from banks, the newspaper on Saturday quoted unnamed banking sources in Shenzhen as saying.

Banks will also tighten mortgage regulations to ensure that speculators are not granted loans, the paper said.

Most second-home buyers in Chinese cities have been required to make downpayments of at least 60 percent since 2011. Beijing raised the downpayments to 70 percent in April.

Chinese authorities, concerned about social stability as growing numbers of people get priced out of the market, have vowed to increase the supply of land for homes and spend more on affordable housing projects.