Cities issue new housing policies

Potential homebuyers look at models of residential property on Friday at a real estate trade show in Shenyang, Liaoning province. [Photo / Provided to China Daily]

Local governments are issuing new property curbs as soaring housing markets put their 2013 price-rise targets ever further beyond reach.

Following earlier tightening moves by first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, 11 second-tier cities had announced curbs as of Thursday.

Zhengzhou in Henan province issued tightening regulations in early September. The remaining 10 cities — Wuhan, Shenyang, Nanchang, Xiamen, Nanjing, Hangzhou, Changsha, Fuzhou, Taiyuan and Xi'an — announced new policies from Nov 22-28.

Outpacing incomes

"All these cities saw a year-on-year gain of more than 10 percent in new home prices last month, outpacing the growth of average per capita disposable income and local GDP," said Lu Qilin, research director at Shanghai Deovolente Realty.

Although Xiamen is not a provincial capital, it's urgent for its local housing regulator to implement new curbs on housing prices because of the large gain, added Lu.

Tightening measures vary from city to city. For example, Shenyang and Nanchang raised the required period of payments into social security programs or taxes for households without local permanent residence permits (hukou). The new minimum is two years, compared with one year previously.

In Hangzhou and Xiamen, those buying second homes with mortgage financing must make down payments of at least 70 percent of the home price, against 60 percent previously.

Under pressure

Second-tier cities are taking the lead this time in taming housing markets because local leaders are feeling the pressure from higher levels, the Economic Information Daily reported on Wednesday.

Those cities' housing regulators, and vice-mayors in some cities, were asked to make personal reports to the central housing ministry last week.

These officials were under a lot of pressure this time, because they had to explain the failure to rein in housing prices, an unidentified insider told the newspaper. And it's the housing ministry's "tough attitude" that led to the round of new policies, added the source.

The State Council, China's cabinet, earlier told all provincial capitals to set an annual home price increase target, excluding Lhasa in the Tibet autonomous region.

Under this requirement, most cities' permitted annual increases are supposed to be lower than the growth rate of rural per capita disposable incomes. But some cities have already seen prices exceed the target.

Ding Zuyu, executive president of E-House (China) Holdings Ltd, forecast in early October that because most local governments haven't been able to keep home price hikes within their targets, first- and second-tier cities are likely to announce separate steps.

Ding described those steps as "gestures" to show the central government the cities' resolve to stabilize the residential market.

Local governments will take differentiated measures, and the era of the central government issuing one-size-fits-all policies is over, said a report from the China Index Academy.

The academy is the research arm of SouFun Holdings Ltd, the owner of the nation's biggest real estate website.