Guangzhou, Shen­zhen act to cool prop­erty mar­ket

The Sun (Malaysia) - - MEDIA & MARKETING -

BEI­JING: China’s south­ern megac­i­ties of Guangzhou and Shen­zhen are the lat­est cen­tres to im­pose new mea­sures to cool their over­heated real es­tate mar­kets, in­clud­ing higher mort­gage down­pay­ments and home pur­chase re­stric­tions.

A prop­erty boom has given a welcome boost to China’s econ­omy this year, fu­elling de­mand for ev­ery­thing from con­struc­tion ma­te­ri­als to fur­ni­ture, but a grow­ing buy­ing frenzy is adding to wor­ries about ever-ris­ing debt and risks to the bank­ing sys­tem.

The new mea­sures are the lat­est steps to tighten credit flow­ing into the prop­erty sec­tor as the govern­ment tries to balance the need to pre­vent bub­bles while stim­u­lat­ing eco­nomic growth.

Prices for new homes in the boom­ing tech cen­tre of Shen­zhen rose 36.8% from a year ago in Au­gust, while Guangzhou’s new home prices rose 21.1% over that pe­riod, Na­tional Bureau of Sta­tis­tics (NBS) data showed.

Other cities in­clud­ing Chengdu, Ji­nan, Wuhan and Zhengzhou have al­ready an­nounced new re­stric­tions on prop­erty pur­chases as the govern­ment tries to dampen prices stoked by prop­erty spec­u­la­tors in sec­ond- and third-tier cities across the coun­try.

The av­er­age new home price in 70 ma­jor cities climbed an an­nual 9.2% in Au­gust, up from 7.9% in July, ac­cord­ing to the NBS.

No­mura an­a­lysts said the new mea­sures were ex­pected to help cool frothy prices in the big­gest cities and should pre­vent the mar­ket frenzy from spilling over into smaller cities.

“We also be­lieve it un­likely that the lat­est tight­en­ing mea­sures will cause the bub­ble to burst, spark­ing a col­lapse of home prices.

“We en­vi­sion a more likely sce­nario to be a mild re­treat or pro­longed flat­ten­ing of home prices in tier-1 cities,” they said in a note on Tues­day.

First-time home buy­ers in Shen­zhen will face min­i­mum down­pay­ments of 30%, but de­posits for others will be raised to no less than 50%, state news agency Xin­hua quoted a govern­ment doc­u­ment as say­ing.

Down­pay­ments for sec­ond-home buy­ers in China’s south­ern Guang­dong prov­ince near Hong Kong will be in­creased to no less than 70%, Xin­hua said with­out giv­ing fur­ther de­tails.

Guangzhou has lim­ited lo­cal res­i­dents to pur­chas­ing a max­i­mum of two prop­er­ties, ac­cord­ing to a state­ment posted late on Tues­day on the Guangzhou govern­ment’s web­site.

Non-lo­cal res­i­dents will be al­lowed to buy one prop­erty, if they can prove they have paid ap­pro­pri­ate lev­els of tax or so­cial se­cu­rity.

Sep­a­rately, lo­cal me­dia re­ported on Tues­day that Suzhou in China’s east­ern Jiangsu prov­ince had un­veiled fresh mea­sures steps, in­clud­ing higher down­pay­ment re­quire­ments, to cool the hous­ing mar­ket. – Reuters

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