China cities move to halt housing frenzy

Posted on September 27, 2016

Cranes stand idle at buildings under construction in Hangzhou, China, on Monday, Sept. 5, 2016. Global economic leaders stepped up warnings that the populist mood sweeping many developed nations is a threat to trade and growth, calling from the sidelines of the Group of 20 summit for governments and businesses to fight to keep goods flowing across borders. Photographer: Qilai Shen/Bloomberg©Bloomberg

China is trying to cool overheated property markets in the country’s largest cities, taking unprecedented measures at local level to damp sales — even persecuting overzealous estate agents.

Amid a 15-month price surge in the country’s biggest cities, with some such as Xiamen recording annual growth above 40 per cent in August, municipal governments have moved this week to reduce what Beijing sees as excess speculation.

    Hangzhou, host of this months’s G20 summit, on Tuesday introduced rules requiring buyers at auction of high-priced land to pay the full amount within a month, a move aimed at reining in China’s infamous “land kings”, developers prepared to pay above the market rate during pricing booms.

    Mass land purchases aside, local governments are also trying to put a lid on a boom in home purchases resulting from earlier attempts to ease inventory by lowering downpayment requirements and transaction taxes.

    Nanjing, capital of Jiangsu Province, on Monday became the fourth major tier-two city to introduce restrictions on home sales by limiting those without local residence permits to a single purchase in the city and denying further purchases to local residents with two or more homes.

    Meanwhile, an editorial on Tuesday in official Communist party newspaper the People’s Daily warned against speculation in the housing market, saying “the stormy situation in national large midsize cities’ housing prices has created a new real estate market craze”.

    The article named a number of companies from outside the sector that it said had increased their real estate investments hoping to make a quick profit during the upswing

    The government is also targeting real estate agents who are considered to be “hyping” the market by creating a false sense of urgency, often telling buyers to snap up deals immediately or lose out on them.

    Shanghai’s banking regulator on Monday released a “blacklist” of agents considered untouchable by the cities’ lenders after they skimmed funds from home transactions, according to respected financial media Caixin.

    Several Shanghai estate agents were arrested this month for prompting a spate of divorces in the city by telling residents unmarried couples would be exempt from higher downpayment requirements.

    Shanghai’s estate agents are not the only ones under fire. Two Chengdu agents suspected of spreading false rumours about home sales were arrested on Monday, according to the local police force’s official Weibo account.

    Over the weekend, the Chinese press was aghast when news spread that a whole building of six-metre-square “pigeon lofts” priced at Rmb880,000 ($132,000) each had sold out in a day in the southern coastal city of Shenzhen.

    However, the local land ministry reported on Monday that only 11 such apartments existed and just six had been sold, saying the agents responsible for spreading the rumours would be severely dealt with.

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