'Land kings' emerging in smaller markets, experts warn
Second-tier cities are rolling out policies to curb soaring property prices and speculative buying, but experts warned those moves may lead to unexpected results and more measures will be needed to stabilize urban housing markets.
On Wednesday, Xiamen, East China's Fujian Province, announced plans to reimpose housing purchase limits, according to a statement on the website of the Xiamen Municipal Bureau of Land Resources and Real Estate Management. The curbs are expected to be effective next Monday.
Home purchase limits in Xiamen were completely lifted in January 2015.
Local residents with a Xiamen hukou (household registration) can buy a maximum of two apartments per family, while families without a hukou could purchase only one, said the policy.
Also, non-local households that can't provide documents certifying that they have been paying social security or income tax for 12 consecutive months are completely banned from buying apartments, said the statement.
Xiamen is not the first city to impose such limits. On August 12, Suzhou in East China's Jiangsu Province announced similar rules.
Wuhan in Central China's Hubei Province also announced plans Wednesday to toughen the terms on mortgages for second-home purchases, the Securities Times reported Wednesday, citing a notification issued by local banking regulators. The new policy will take effect on Thursday and will require buyers to make down payments of at least 40 percent, compared with 30 percent now, when borrowing to buy a home.
"These moves show the efforts being made by authorities in second-tier cities to calm the market and eliminate speculative buying as prices surge," Zhang Huaxue, deputy general of China Index Research Institute, told the Global Times on Wednesday.
In recent months, prices have skyrocketed in second-tier cities like Xiamen, Hefei in East China's Anhui Province and Suzhou and Nanjing in Jiangsu Province.
In June, the average new home price in Xiamen jumped by 39.6 percent year-on-year, the largest gain among China's second-tier cities. Next came Nanjing and Hefei, with year-on-year increases of 34.9 percent and 34 percent, respectively, according to the National Bureau of Statistics.
Experts said market-cooling moves might lead to unintended consequences.
For example, there may be a surge in divorces, which certainly isn't what the government wants, Zhang said. A divorced person can purchase one more apartment according to the new policy in Xiamen.
An even more pressing issue is how to stop the emergence of "land king" transactions in second-tier cities, Zhang said.
On August 26 alone, five "land kings" were crowned in Xiamen. Among the new property royalty, Rongqiao Group paid 4.22 billion yuan ($629 million) for a site, the highest ever for the city in terms of the price per square meter.
