Prospective buyers attend a real estate trade fair in Chengdu, capital of Sichuan province, on Oct 3. People will only be allowed to purchase one property in certain areas of the city, while those buying a second property will need to make a down payment of no less than 40 percent of the purchase price, the local government says. (Photo/China Daily)
More cities may follow suit after 19, including Beijing, launched cooling measures in the past week to rein in housing price increases, said analysts.
The measures announced by the cities during the seven-day National Day holiday included higher mortgage down payments and home purchase restrictions to curb speculation.
However, "more lower-tier cities may join the move against speculative home purchase soon, particularly those that have low inventory for the next six months and fast price growth in the past six months," said a research note by CITIC Securities.
Wu Huimin, an analyst with property services provider DTZ, said, "Cities such as Shijiazhuang and Qingdao with rapid inflow of population are very likely to introduce tightening policies against speculative buying."
Wu said authorities will use a combination of measures to curb investment buying and make precise differentiation between self-use and speculative purchases. These are likely to include detailed requirements for average living space per person in a household and qualification of buyers, Wu said.
Xu Jing, an analyst with Shanghai Yudi Property, attributed the speculative purchases in key cities to easy financing, short supplies, huge demand and a lack of other investment channels that might bring stable returns.
If the supply and demand situation cannot be changed in the short term, a higher financing threshold can be a quick fix to curb quickly rising home prices, he said.
"Without financing curbs, speculative buyers can still afford to buy," said Xu.
Nanjing in Jiangsu province, Xiamen in Fujian province and Wuhan in Hubei province, which have all taken cooling measures, saw average housing prices rise more than 20 percent in September year-on-year, according to data of the China Index Academy, a research organization that monitors housing prices in 100 cities.
Zhou Zihui, a 42-year-old homebuyer in Nanjing, has bought and sold six apartments in the past five years, yielding about 4 million yuan ($599,380) for her.
But she said that with the new policy in place, she is no longer qualified to buy another apartment or able to pay the down payment.
Zhang Dawei, an analyst with Centaline Property, said the cooling measures have proved effective.
During the weeklong holiday, year-on-year transaction volume in first- and second-tier cities dropped by more than 30 percent, Centaline data indicated.
