Xiamen, China's hottest property market, imposes curbs to cool prices

SHANGHAI (BLOOMBERG) - China's southern Xiamen city, where home-price gains led the nation last month, banned some buyers from purchasing homes, joining larger hubs in trying to cool soaring property prices.

Xiamen, a port city in eastern Fujian province, will suspend selling homes to local buyers who already own two residences, and will ban non-residents from buying a second house, it said in a statement on Wednesday (Aug 31) on the city's land resources and real estate management bureau website. Curbs will be effective from Sept 5 to the end of 2017.

The newly-unveiled home-purchase curbs apply to residences smaller than 144 square metres in area, according to the statement.

Home prices in Xiamen rose 4.6 per cent in July, the biggest increase among 70 cities tracked by the government, after climbing 4.7 per cent the previous month. They've jumped 38 percent in the past year, a record for the city.

In Shanghai, home prices gained 1.4 per cent in July, and they increased 2 per cent in the southern business hub of Shenzhen, cooling from earlier levels after the cities unveiled curbs in March designed to deter speculative purchases.

Xiamen stepped up tightening imposed in July, when the city government raised mortgage down-payment requirements for some second homes to 60 per cent from 40 per cent. Earlier this month, Nanjing, Jiangsu's provincial capital, and Suzhou, a regional manufacturing base, also raised down-payment requirements for some buyers of second residences, adding to restrictions introduced in Hefei, the provincial capital of Anhui.

"It's a signal that more tightening is looming," said Zhang Hongwei, a research director at Shanghai-based Tospur Real Estate Consulting Co. "More large second-tier cities are likely to impose housing curbs, either raising down-payment thresholds or introducing home-buying bans."