China planning property clamp

Beijing, March 2, 2013

China could increase required down payments and loan rates for buyers of second homes in cities where prices are rising too quickly, the State Council said in the central government's latest move to contain housing costs.

Local governments must set home price control targets in the first quarter, the central government said in a statement on its website.

The State Council, China's cabinet, on February 20 restated its intention to extend a pilot property tax programme to more cities and urged local authorities to put price-control targets on new homes, in an effort to calm real estate markets.

"Currently the property tightening campaign is at a critical stage, sentiment on rising home prices have strengthened," the statement said.

In February, average home prices in China's 100 biggest cities rose for the ninth straight month although the pace of increase slowed, a private survey showed yesterday.

Rising home prices have reignited concerns about property inflation and analysts say local governments may announce plans to tighten property purchases after Beijing reiterated its pledge to calm the house market.

Currently, minimum down payments for second homes are 60 per cent of a home's value while mortgage rates for such purchases are 1.1 times the central bank's benchmark interest rates.

Beijing has instructed banks to prioritise and assist first-time home buyers to help keep a lid on social discontent.-Reuters

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