Beijing/Shanghai: China's cabinet Saturday laid out further detailed measures for keeping the property sector in check, empowering and ordering local governments to take steps to control speculative buying.
Provincial and municipal governments in areas experiencing rapidly rising property prices may temporarily restrict the number of properties people may buy, in accordance with the situation in their jurisdictions, the State Council said.
The measures also made clear to banks that they would be expected not just to raise mortgage rates and down payment requirements, but to refuse credit to people who are clearly buying homes for speculative purposes.
The announcement drives home the seriousness of Beijing's clampdown on the red-hot property market, launched in earnest on Thursday with an order to raise mortgage rates and down payment requirements.
"The prices of houses and land in some cities have seen overly fast increases recently, and speculative purchases have becomes quite active again, requiring our close attention," the cabinet said in a statement on the government website www.gov.cn.
The directives come on the heels of an acceleration in urban property inflation to 11.7 per cent in the year to March from February's 10.7 per cent reading. Economists believe the official figures grossly understate the extent of price rises, especially in major cities.
Saturday's fresh directive laid out rights and responsibilities of provincial and municipal governments in combatting rapid rises in property prices, which have hit some areas more than others.
"All regions and related agencies must fully recognise the harm of overly fast rises in property prices and effectively enforce policies decided by the central government and take resolute measures to contain property prices," it said.
Cut-off limits
Banks should "noticeably" raise downpayment requirements and mortgage rates for people buying their third or subsequent home, the cabinet said, without specifying rates.
In cities where home prices are rising quickly, banks may refuse mortgages to anyone buying their third or subsequent home as well as to people who cannot prove residence in that city through tax and social insurance records, it said.
The recent steps to control the property market reflect authorities' worries about the social implications of sky-high housing prices, as well as over the damage that could be brought to the world's third-largest economy should asset prices get out of control and subsequently fall.
They also tie into an overall concern about the economy overheating, after data released on Thursday showed it expanded by 11.9 per cent in the first quarter from a year earlier.
While consumer inflation remained subdued in March, at 2.4 per cent compared with 2.7 per cent in February, officials say inflationary expectations and higher commodity prices could add to upward pressure on prices.
Going too fast
- 11.7% urban property inflation in the year to March
- 10.7% the comparable statistic in the year to February
- 11.9% increase in first-quarter economic growth
