Beijing limits home buyers

BEIJING: The city of Beijing has issued rules limiting families to one new apartment purchase as the authorities try to rein in rampant property speculation and soaring prices, state media reported yesterday.

'For the time being, one family can buy only one new home in the city,' China News Service said.

The capital's government also ordered banks to refuse home loans to people who cannot prove they have paid taxes and made social security contributions in Beijing for at least one year, the report said.

Banks also have been told to block mortgage applications for people buying their third property. However it was not clear in the report who would be affected by this.

The rules marked the latest in a series of measures by the Chinese authorities as they seek to reduce the risk of the red-hot property market overheating and derailing the booming economy.

Prices in major cities rose 11.7 per cent year-on-year last month, the fastest pace since a nationwide survey was widened to 70 cities in July 2005, official data show.

At the Beijing Real Estate Expo earlier this month, the average price of a new apartment in the Chinese capital was 21,164 yuan (S$4,256) per sq m, double that of last year, state media said.

That means a 90 sq m apartment in Beijing would cost 1.9 million yuan, compared with the average per capita income of 17,175 yuan last year.

In the past two weeks, China has tightened restrictions nationwide on advance sales of new property developments, introduced new curbs on loans for third home purchases and raised minimum downpayments for second homes. Banking regulators have also told lenders to conduct quarterly stress tests on mortgages as the government seeks to clamp down on bad loans.

This week, state media said China was likely to introduce a property tax on residential housing in the first half of the year on a trial basis in Beijing, Shanghai, the southwestern municipality of Chongqing and the southern city of Shenzhen.

The moves highlight growing concern about a possible rise in bad debts tripping up China's economy.

Source: Straits Times, 1 May 2010