Property

More cities unveiled their new property market cooling measures

More cities unveiled their new property market cooling measuresGuangdong’s government became the first to unveil rules to cool down the property market as requested by the Central Government earlier this year. According to the statement posted on its official website, four cities, namely Guangzhou, Shenzhen, Foshan and Zhuhai will continue to enforce existing market cooling measures to curb speculative purchases. However, to leave some leeway for city-governments to customise their own versions of property cooling measures, the provincial-level statement itself is simply a reiteration of existing measures and does not contain any new policies to be enforced across the province.

It came weeks after the State Council urged local governments to take stronger actions, including enforcing the 20 percent capital gains tax on property re-sales which has long been ignored, to make sure property prices will be under control. All 28 provincial-capital cities and 4 municipalities will have to report their housing price targets every three months. Those who fail to meet their targets will be penalised. Local governments are also required to report their housing supply every quarter.

A number of big cities, including Beijing, Shanghai, Guangzhou, Shenzhen and Chongqing, released their plans to put Central Government’s policies into practice. All of these cities said they will strictly enforce the 20% capital gains tax, if the original value of the property can be verified. But not many of them explained in their statements regarding to how the value can be found. In price controls, both governments in Guangzhou and Shenzhen said they will limit new-home price increases to below the annual growth rates of the per capita disposable income. The growth rates of the disposable income in Guangzhou and Shenzhen are set to be around 11 percent and 9 percent this year, respectively. Surprisingly, as two leading cities in China, neither Beijing nor Shanghai gave any specific price targets in their statements. Beijing only said it will keep home price steady compared with last year, while Shanghai did not mention it at all.

On top of that, Shenzhen’s government plans to build some 40,000 units of subsidised homes this year, while Guangzhou said it will provide land for residential development of up to 5.95 square kilometers this year, up over 30 percent from an average of 4.48 square kilometer released during the past five years. In Beijing, the government imposed a tougher purchase restriction, announcing that unmarried local residents who have not owned any property in the city would be allowed to purchase only one residence. Those who already own one or more homes will be banned from buying any residences. The government also lifted the down payment requirement for second-home buyers from 60 percent previously to at least 70 percent.

In Shanghai, the government announced that banks will be banned from giving mortgages to residents if they already have two or more properties. Non-permanent residents, foreigners, young or divorced people will also be subject to a greater scrutiny in applying for mortgages. Moreover, the government said the land supply this year would not be less than the average supply in the past five years.