Four cities in China have announced new restrictions on property purchases as the government tries to cool soaring home prices stoked by property speculators.
According to a Reuters report, the move is the result of rampant speculative activity in the country’s second- and third-tier cities, which have been developing at a rapid pace.
The restrictions have been applied in Chengdu, Jinan, Wuhan and Zhengzhou. They include a string of steps designed to tighten credit flowing into the property sector as the government struggles to find a balance between stimulating economic growth and preventing bubbles.
International banking firm OCBC said a spate of credit tightening measures introduced earlier this month reveals that “China’s top level may have reached consensus that the concerns about overheating in the property market may have overshadowed concerns about the slowing economy”.
“The shift of policy tone also shows that China is unlikely to stimulate the economy further aggressively. This may not bode well for market sentiment in the longer run,” it said.
A number of mid-tier Chinese cities have become targets for property speculators, including Tianjin, Hefei and Suzhou, which have also recently rolled out counter-measures to limit purchases.
The average new home price in 70 major cities climbed an annual 9.2 per cent in August, up from 7.9 per cent in July, according to data from China’s National Bureau of Statistics.
Residents of the inland city of Zhengzhou who already own two properties, and non-residents who own one, will now only be able to buy homes larger than 1,938sq ft, according to a notice posted on the local government’s website.
Similarly, in the capital of southwest Sichuan province, Chengdu, buyers will only be allowed to purchase one property in certain city districts, and those buying their second property will need to place a downpayment of no less than 40 per cent.
Meanwhile, China’s Ministry of Housing and Urban-Rural Development said it has investigated and punished 45 property developers and intermediaries for encouraging speculation via false advertising and breaking presale rules.