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China combats property speculation

2010-04-20 18:00 BJT

China has unveiled a series of measures to keep the property sector in check. The State Council raised the down payment rate last week to an unprecedented 50 percent for a second home mortgage. The latest announcements from the banking and housing regulators add weight to the central government's move to cool the red-hot property market.

The State Council introduced measures last Wednesday which aim to curb rising property prices and rein in asset inflation.

This means people buying a second home must now make at least a 50 percent down payment, at a mortgage rate of no less than 1.1 times the benchmark rates.

The new measures call for a 30 percent minimum down payment to buy a first home larger than 90 square meters. The State Council also urged governments at all levels to speed up construction of social welfare housing to provide 3 million apartments for the low-income families by the end of the year.

Housing prices in 70 major cities rose about 12 percent year-on-year in March, continuing the momentum from February's 11 percent surge.

China's banking regulator pledged last Friday it would firmly enforce new central government's rules. The China Banking Regulatory Commission ordered banks to be vigilant in assessing the credit worthiness of the mortgage applicants and to crack down on fake mortgages, such as loans purportedly to buy a property but earmarked for other uses.

On Saturday, the State Council urged banks to refuse mortgages to people buying homes in cities where they don't pay taxes, as well as anyone buying their third or subsequent home.

The central government said any developers which hoard land or take part in speculation will not be allowed to take out further loans from banks. They will also be prohibited from getting listed and re-financing and restructuring.

Elsewhere, policies to tighten property market have not eased. The Ministry of Housing and Urban-Rural Development said on Monday that developers cannot ask home buyers to pay deposits in any form without presell certificates. Developers should begin to sell all the units within 10 days after obtaining presell permission. They must sell the properties at the exact price outlined in the presell plan according to local regulations. Developers are also not permitted to change names of the buyers after the contracts are signed.

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Editor: Yang Jie | Source: