Shanghai tightens housing rules

BEIJING: Shanghai will raise the minimum down payment for second-home purchases to 70% from 60% in a bid to calm surging home prices, according to the city’s housing bureau, following similar moves by other big cities in China.

Home prices in large Chinese cities have set records, despite a four-year long government campaign to cool the property market, raising concerns over a potential price bubble and even social unrest as housing becomes increasingly unaffordable for many people.

Shanghai is the third city to implement a minimum down payment for second-home buyers of as high as 70%, and its move comes after Shenzhen and Beijing tightened measures in recent months.

“We will continue to improve the systems of the property market and affordable housing to effectively curb excessively fast property price rises,” the bureau said in a statement on its website. www.shfg.gov.cn. More cities are expected to follow suit.

“Guangzhou should be the next to move,” said Liu Yuan, a head of research at property consultancy Centaline.

In Shanghai, where houses are among the most expensive in China, home prices rose 17% in September from a year ago. Guangzhou’s prices jumped 20% and Beijing prices rose 16% in the month, both record growth rates.

China property shares extended losses yesterday after the announcement. Poly Real Estate ended down 1.1% in Shanghai, while Country Garden sank 3% andChina Resources Land was down 1.6% in Hong Kong.

Property shares have been roiled by uncertainty ahead of the Communist Party’s Third Plenum from today to Monday, which will see some of China’s top leaders gather behind closed doors to set the economic agenda for the next decade. Investors are waiting to see if any controls on the market will be announced after the meeting.

Also under the new Shanghai rules, migrant families in the city without residence permits must have paid their monthly social security fees or income tax for two years before they are qualified to buy a first home in the city. Previously they only needed to pay the fees for one year.

The housing bureau would increase the land supply for residential homes and study ways to lower the threshold for affordable housing applicants next year to allow more people to be covered by public housing, it added. – Reuters