ST : Property curbs for more Chinese cities

24 Jan 2011,
Property curbs for more Chinese cities

Home buyers in second- and third-tier cities to be reined in

BEIJING: China is to extend its curbs on property purchases to second- and third- tier cities, it was reported yesterday, as it rolls out more measures to cap soaring housing prices.

The authorities have drawn up a list of cities - among them Qingdao and Jinan - that will have to implement the limits, the Chongqing Evening News quoted an unnamed high-level official at the Ministry of Housing and Urban-Rural Development as saying. There is no formal definition of a second-tier city. A city with at least four million people, fast-growing purchasing power, good growth numbers, developed infrastructure, or a combination of these factors, can be deemed second-tier. Most provincial capitals such as Jinan and Harbin are considered third-tier cities.

The latest curbs come after top-tier cities such as Beijing and Shanghai have issued property purchase limits.

Beijing was the first to introduce tough measures when it barred families from buying more than one home in May last year. Shanghai followed suit in October.

According to yesterday's report, 16 cities have issued such regulations - one of several measures aimed at cooling China's heated property market.

The government has also raised minimum downpayments needed for property transactions to at least 30 per cent, and the central bank has increased interest rates twice since October last year.

It has also raised the amount of money that banks must keep in reserve, in a bid to curb lending.

However, property prices have stayed stubbornly high, posting their fourth straight month-on-month rise last month, even though December is usually a slow month for home sales.

Shanghai and Chongqing have already announced that they will introduce a property tax to curb speculation so as to increase the supply of affordable housing.

Shanghai, China's richest city, is expected to impose the tax only on those buying new homes, while Chongqing will impose it on those buying expensive residential units, local reports said.

Analysts have blamed the government's massive stimulus measures launched to combat the financial crisis in late 2008 for flooding the market with liquidity that has led to rising property prices and inflation.

Meanwhile, new regulations aimed at ending illegal forced demolitions came into effect last Friday.

The rules seek to reduce disputes over the expropriation and demolition of people's homes to make way for new buildings, the official Xinhua news agency reported late on Saturday.

Under the rules, violence or coercion cannot be used to evict homeowners.

If the government authorities cannot reach an agreement with residents over expropriation or compensation for their property, demolitions can be carried out only after the local court has reviewed and approved them.

The previous rules had authorised local governments to enforce demolitions, the report said, quoting unnamed officials at the Ministry of Housing and Urban-Rural Development and the State Council, China's Cabinet.

Land disputes have become China's most volatile social problem as officials and developers seek to cash in on the property boom, sometimes forcing people out of their homes without proper compensation.

According to figures released by the China Academy of Social Sciences, a top government think-tank, fights over land account for 65 per cent of rural 'mass conflicts', and the problem is prevalent in cities too.

AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS