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Shanghai tightens property curbs

Reporter: Chen Tong 丨 CCTV.com

12-01-2016 04:55 BJT

Shanghai is taking further steps to cool its sizzling housing market. Last night, the city announced tougher restrictions on housing sales, and plans to increase the percentage of down payments for residential apartments. 

Starting from today, first-time home buyers will have to pay a minimum 35 percent down payment, compared with only 30 percent previously. Moreover, the term "first-time home buyer" will now only refer to those who do not own any home in the city and have never applied for any mortgage loans. In other words, if someone sells their first home and plans to buy another one, he will be considered a second-home buyer and will have to come up with a down payment of 50 or 70 percent of the new property price, depending on its value and location.

Real estate agencies were surprised by the new restrictions. Staff at this real state agency in Shanghai's downtown Jing'an district were busy studying the new policies last night. Staff say the tougher restrictions will have a big impact on them because most of their clients are second-time buyers.

"This will hit us hard because it targets clients who want to trade up," the staff said.

Over the last eight months Shanghai had already issued a series of restrictions on home buyers and property developers to control the housing market. Prices for Shanghai residential property climbed by 0.5 percent in October from the previous month, a much lower increase than the 3.2 percent recorded in September. The property market seems cool enough, but experts say the government wants to be sure things stay under control long-term.

"In a long run, housing prices still need to be controlled. The apartment stock in cities like Shanghai is not enough now, so we do need purchasing restrictions to adjust the relationship between supply and demand. It's coming to the end of the year, so local governments are under pressure to control housing prices. Appropriate restrictions are needed to stabilize market expectations and prevent speculation," said Yan Yuejin, research director of E-house Research Institute.

Shanghai is not the only Chinese city putting more effort into controlling the market. The city of Tianjin updated its purchasing restrictions last night as well. Under new rules there, first-time home buyers with local residence will have to make a minimum down payment of 30 percent on mortgage loans. Those who already own a house and have outstanding mortgages must make at least a 40% down payment when applying for commercial loans for a second home.

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