Stricter local rules on down payments, number of homes people can own
Local governments of 19 cities in China rolled out policies including higher down payment rates and purchase restrictions over the National Day holidays to cool their red-hot real estate markets.
Experts praised the policies as "understandable," noting the government needs to keep the housing market from overheating.
The measures were rolled out between September 30 and Thursday in first-tier cities such as Beijing and Shenzhen and smaller cities including Wuxi and Suzhou in East China's Jiangsu Province.
Some measures involved an increase in the minimum mortgage down payment for home buyers. The Beijing municipal government, for example, introduced a policy on September 30 to increase the down payment for first-time house buyers to 35 percent from 30 percent.
Other local governments launched polices to restrict the number of houses that people can buy. On Tuesday, the government of Guangzhou, capital of South China's Guangdong Province, issued a statement that limited local residents to purchasing a maximum of two properties, while stipulating that non-local residents who can provide certain tax or social security payment documents can purchase up to one property.
Experts note that local governments' real estate policies have been volatile in recent years.
The government of Zhuhai in Guangdong Province, for example, launched a policy on Thursday that limited the house purchasing rights of certain residents. The policy was launched only about six months after the local government completely lifted house buying restrictions in the city.
"In order to maintain sound growth of the domestic economy, the central government must make sure that the real estate market develops in a stable way, neither overheated nor overly cool," Xue Jianxiong, president of the asset management firm UTC, told the Global Times on Friday.
Gu Yunchang, deputy head of the China Real Estate and Housing Research Association, told the Global Times on Friday that the real estate market in China has cyclical tendencies.
"The real estate market declined in 2014 and stabilized in 2015. In 2016, the real estate market in China showed signs of unevenness. The housing market in most first- and second-tier cities heated up, but oversupply still continued in smaller cities," Gu noted.
Statistics from the National Bureau of Statistics showed that in September, of the 70 major cities in China, 64 cities saw their housing prices rise compared with August, while 62 saw their housing prices surge on a yearly basis.
Differing from city to city
This round of real estate policies has been "a bit too violent," and in some cities, the policies have not been rolled out at the most appropriate time, Xue said.
He noted that the effects of the policies will differ from city to city.
"The housing prices in Suzhou will fall soon, as the city's prices have been surging for a long time and on a great scale, and the market demand has therefore been digested to a great extent. But in Beijing and Guangzhou, where the prices have yet to reach their peak, the housing market will continue to rise despite the controls," he said.
Xue also pointed out that as controls tighten up in first- and second-tier cities, capital will flow to other cities, which might lead to the next round of housing price spikes.
