Three Cities Join Growing Push to Combat Frenzied Homebuying
(Beijing) — Hangzhou, Xiamen and Fuzhou are joining the growing number of cities in China that are tightening rules on homebuying in an effort to cool down surging home prices.
Prospective homebuyers in Hangzhou, the capital of Zhejiang province, will have to put down larger down payments to get a second apartment or if they have previously had a mortgage. As of Wednesday, the down-payment requirement was raised to 60%, up from 50%.
Hangzhou also said it will scrutinize the credit eligibility of homebuyers more carefully in order to curb excess leverage in the housing market.
Hangzhou — the base of Chinese Internet giant Alibaba Group Holding Ltd. — has seen home prices skyrocket recently. In February, the average price of Hangzhou’s new residential homes picked up 25.6% from the same month a year ago, while average prices of previously owned properties rose 21% year-on-year, according to the National Bureau of Statistics.
Hangzhou further limited purchase rights of local singles, including divorced people seeking to buy a second apartment, so that they temporarily won’t be able to buy homes. Hangzhou didn’t specify how long this limitation will last.
The limitation is aimed at curbing speculation and weeding out those would-be homebuying couples who get a “strategic” divorce so they can get a second residence. Couples have been getting divorced to skirt rules that allow a married couple to own only one home.
Meanwhile, Fuzhou, the capital of Fujian province, and Xiamen, a popular tourism destination along the southeast coast of Fujian, also rolled out similar restrictions.
Fuzhou’s city government said out-of-towners will be no longer be qualified to buy a home in five urban districts by making back-payments of their social security or income taxes. All five urban-district local buyers of second homes who need a mortgage now need to put down 50%, up from 30%. Fuzhou also plans to double the land supply for residential developments in effort to cool down local prices, according to its statements.
Some experts said a scarcity of land for home development has been a significant contributor to price increases in Chinese cities.
In February, the average new residential home price in Fuzhou edged up 24% from a year ago, while the average price of previously owned properties rose 16.7% year-on-year, National Bureau of Statistics data shows.
Meanwhile, Xiamen urged property developers to halt sales of homes that are less than 180 square meters to outsiders who fail to provide proof they have paid taxes for at least three years or contributed to the town’s social security program.
The average new residential home price in Xiamen in February jumped 36.9% from a year ago, while the average price of previously owned homes shot up 31.8% year-on-year, NBS data showed.
All the restrictions were announced Tuesday evening and came into effect Wednesday.
Already this month, more than 30 cities have rolled out similar housing purchase curb policies, according to data from Fang.com, a real estate agency.
Contact reporter Pan Che (email@example.com)
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