Feb. 21 (Bloomberg) -- Shanghai and Guangzhou joined China’s capital, Beijing, in announcing restrictions on home purchases, responding to property curbs imposed by the central government aimed at preventing a housing bubble.
The two cities will ban local residents who own two or more homes from buying more property and non-local homeowners from making additional purchases, according to the state-run Xinhua News Agency and the Guangzhou Daily on Feb. 19. Other cities with similar plans include Nanjing and Harbin, Xinhua reported.
China extended property curbs last month, including raising the minimum down payment for second-home purchases, telling local governments to set price targets on new properties and introducing taxes on residential homes in Shanghai and Chongqing. The central bank raised interest rates on Feb. 8 for the third time in four months.
“The housing market will be subdued in February” because of the tightening of monetary and property policies, including new rules on home purchases, Shen Jianguang, Hong Kong-based chief economist at Mizuho Securities Asia Ltd., said in a note dated Feb. 18. China’s property prices may fall by more than 5 percent nationwide this year, with first-tier cities seeing declines of more than 10 percent, he said.
New Home Prices
China’s January new home prices rose from a year earlier in 68 of the 70 cities monitored by the government, defying the new property curbs, the statistics bureau said on Feb. 18. The measures by Shanghai and Guangzhou follow similar rules in Beijing, where the municipal government added a requirement for non-residents to provide five years of tax documentation to buy apartments in the capital.
Families not local to Shanghai can’t buy property without showing they paid tax for at least a year, according to the Xinhua report on Feb. 19.
January new home prices advanced 6.8 percent from last year in Beijing and climbed 1.5 percent in Shanghai, the statistics bureau said. Haikou had the biggest gain, surging 21.6 percent, and 10 cities had increases exceeding 10 percent.
“The price rise was largely due to expectations for stricter regulations ahead and will come to an end soon,” Mizuho’s Shen said in the note.
Chinese Premier Wen Jiabao pledged to curb property speculation and add more affordable housing in his Feb. 1 Lunar New Year speech. The country needs to “resolutely control the property market” and keep prices stable, he said.
China Vanke Co. and Poly Real Estate Group Co. are the nation’s largest property developers.
by Chua Baizhen and Paul Tighe and Jim McDonald Bloomberg News February 20, 2011
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