Eight Chinese cities increase tightening of housing markets

Eight major cities in China have rolled out further measures in the latest efforts to rein in the increasing cost of housing.

Since Friday, the second-tier cities of Xi'an, Chongqing, Nanchang, Nanning, Changsha, Guiyang, Shijiazhuang and Wuhan have tightened housing controls, with most banning home sales within two to three years after purchases.

As of Sunday, houses newly bought in Shijiazhuang will be banned from being sold within five years.

In Wuhan, real estate developers were told not to be biased against home buyers who plan to use mortgages rather purchase property outright.

Analysts said the ban on sales is an effective measure in fighting market speculation.

This new round of housing controls in these eight cities has shown that this is a long term goal, and the authorities will not change their commitment to controlling house prices, said Yang Xianling, research chief of real estate agency Homelink.

The measures taken ahead of the National Day holiday will be a better guide for market expectations, said Yang.

In March, Xiamen became the first city nationwide to introduce a sales ban and more than 40 cities have followed their lead, according to the China Index Academy.

Yang said the tightening mainly targeted the provincial capitals this time as the housing markets there still face inflationary pressures from expected population growth.

Zhang Dawei, chief analyst with Centaline Property, said the housing market tightening was moving to the second- to third-tier cities, and more are expected to follow suit.

The property markets in bigger cities like Beijing have slowed after tough price control measures including higher mortgage rates and down payments. However, the smaller cities saw price rises due to money moving in with fewer restrictions.

Banks in many major cities have raised the mortgage rates.

In Beijing, nearly 20 banks have raised the mortgage rates for first-home purchases by 5 or 10 percent, with some even declining mortgage applications.

The banking regulators in cities like Beijing and Shenzhen have also ordered banks to check consumer loans to prevent money flowing into the property market.

(ASIA PACIFIC DAILY)