BEIJING • Local governments in nine Chinese cities have tightened rules for home purchases in a bid to dampen resurgent demand and rein in excessive speculation.
Beijing, Chengdu, Hefei and Suzhou are among the hubs that have implemented curbs recently to cool home prices. Jinan, Wuhan and Zhengzhou also tightened credit flowing into the property sector as the government tries to balance the need to prevent bubbles while stimulating economic growth.
The authorities introduced measures ranging from raising down payment requirements for both first and second homes to ruling some potential buyers ineligible.
The spate of tightening measures over the past two weeks "shows China's top level may have reached consensus that concerns about overheating in property market may have overshadowed concerns about the economic slowdown", OCBC said in a research note yesterday.
"The shift of policy tone also shows China is unlikely to stimulate the economy further aggressively. This may not bode well for market sentiment in the longer run," it said.
Home prices in the world's most populous nation rose the most in six years in August, defying new policies to curb excessive speculation in big cities and government warnings about asset bubbles.
While gains have been most pronounced in big cities like Shenzhen, where home prices are up about 60 per cent in the past year, smaller centres like Xiamen have also seen runaway growth, with prices soaring more than 38 per cent.
"There will not be a holistic plan to address the property market," said Ms Iris Pang, senior economist for Greater China at Natixis in Hong Kong. "Local governments are the ones who will work out their own measures."
Sichuan's provincial capital Chengdu and Henan's provincial capital Zhengzhou last Sunday banned people from buying a third property in some areas.
Wuxi, a manufacturing base close to Shanghai, raised down payment requirements for second homes to a minimum of 40 per cent of the property's value, from 30 per cent previously.
Beijing has increased down payments for first-time purchasers to a minimum of 35 per cent of the selling price, the highest level among China's biggest cities.
Tianjin banned non-locals from buying second properties, while southern Suzhou said it would warn developers if prices were "notably" higher than costs plus a reasonable profit.
And Jinan, Shandong's provincial capital, increased down payment requirements on first homes to 30 per cent from 20 per cent in select areas, and on second residences in those places to 40 per cent from 30 per cent, according to the official Xinhua news agency.
Apart from increasing down payment thresholds, the eastern city of Hefei banned local residents from buying a third residence and restricted non-local residents from owning more than one property.
Wuhan, the capital of Hubei, raised down payment requirements for first homes to 25 per cent from 20 per cent and tightened rules for purchases of second homes.
Investment in the real estate sector may retreat in the first half of next year as the new curbs take effect, said Beijing-based researcher Wen Bin at China Minsheng Banking.