More Chinese cities tighten home-buying rules to cool prices

BEIJING Tue Nov 26, 2013 5:10am EST

Related Topics

BEIJING Nov 26 (Reuters) - More Chinese cities have rolled out measures to cool surging home prices, joining growing efforts nationwide as authorities come under pressure to rein in a red-hot housing market.

The eastern city of Nanjing, the southern city of Xiamen, Nanchang in central China and Shenyang in the northeast unveiled a number of measures on Monday, according to city government websites, including raising minimum down payments for second home purchases and making more land available.

Wuhan, the capital city of central Hubei province, announced similar rules last Friday.

Many Chinese cities are seeing record home prices, adding to the risk of a property bubble in the world's second-largest economy. Authorities are also aware of the potential for social tensions as many Chinese find themselves priced out of home ownership.

Recently bigger cities including Beijing, Shanghai, Shenzhen and Guangzhou, where prices have surged most, have announced similar measures to cool the market. [ID:nB9N0IQ0 0C]

"This round of the tightening campaign seems to be covering a larger area than market expectations as it has expanded from tier 1 cities to tier 2 cities," said Luo Yu, property analyst with CEBM in Shanghai.

"Given that many cities saw strong home price gains in October, there should be more cities to follow," Luo added.

The government has been trying to rein in prices for four years through measures such as reducing financing for buyers and limiting the number of homes people can buy, and has said it is aiming for "a balanced and sustainable" property market.

It is trying out a housing tax scheme in two cities which analysts expect could be extended further next year.

The unrelenting rise has been buoyed by strong demand for both owner-occupied property and as an investment, largely because of the view that property is one of the best investment options. The problem is also compounded by local governments selling land at high prices for much-needed revenues.

House prices in China are likely to continue to rise in 2014, though at a slower pace than this year due to relatively tight credit controls and government measures aimed at fostering a more sustainable property market, the latest Reuters poll showed.

The latest official figures show home prices in October in Nanjing rose 11.6 percent from a year earlier, Xiamen 16.5 percent, Nanchang 9.6 percent, Shenyang 13.2 percent and Wuhan 10.7 percent, among the highest gains for the month.

The authorities in Nanchang, Shenyang and Wuhan also vowed to increase the threshold for migrant families without local household permits to buy homes, local government websites said. (Reporting By Xiaoyi Shao; Editing by Jacqueline Wong)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.