Chinese govt tightens property rules

• Source: Global Times
• [02:56 January 11 2010]
• Comments

The State Council issued a notice Sunday ordering central government departments and local governments to take concrete moves to curb speculation and provide affordable housing to the public (Xinhua Photo)

By Guo Qiang

The central government has vowed to demolish city slums and build more affordable or low-rent houses in a bid to solve the housing problem of 15.4 million low-income urban households by the end of 2012.

Following a spate of moves late last year to cool the overheated property market, the State Council issued a notice Sunday ordering central government departments and local governments to take concrete moves to curb speculation and provide affordable housing to the public, which has become increasingly desperate in the face of skyrocketing realty prices.

The news instantly went to the top of major news portals nationwide, drawing public attention and provoking heated discussion, with mixed views on the effects of the new policy.

The notice included 11 detailed measures, with a focus on increasing the supply of low-cost houses for low-income families, increasing the land supply for residential housing projects and clamping down on house purchases for speculation and investment.

According to the notice, financial institutions are urged to continue encouraging first-time home buying while strictly implementing mortgage-loan policies on second-time home purchases.

The government requires homebuyers to make a down payment of at least 40 percent when buying a second apartment.

As early as September 2007, the central bank increased the down payment for second-home buyers to 40 percent to curb surging property prices, but it was ineffective, as the figure could vary from 20 percent to 30 percent from place to place, while local banks sought to meet loan-extension targets.

The Ministry of Housing and Urban-Rural Development and other departments were ordered to take more measures to clamp down on property developers that hoard land or houses for more profit, and on real estate brokerage that engages in price deception or spreads rumors to jack up house prices.

The notice also required that city governments nationwide lay out, as soon as possible, the residential housing construction plan for 2010-2012, which should be specific on each year's construction scale of smaller-sized low- and medium-priced homes, low-rent houses and affordable houses.

Governments at all levels were also asked to take action to push property developers to quicken project developments and sales of finished projects.

The notice came on the heels of a spate of government policies to curb surging real estate prices.