Sichuan capital in U-turn on its home sales policy

PUBLISHED : Thursday, 24 November, 2011, 12:00am
UPDATED : Thursday, 24 November, 2011, 12:00am


Less than two weeks after announcing an easing of home purchase procedures, Chengdu, the capital of Sichuan province, has done an about-face, and reverted to the original system.

The changes involve the so-called purchaser verification system, under which the central government has sought to limit third-home purchases. Chengdu said on November 21 that it was strictly implementing the home purchase restrictions regime, under which only the government can verify home purchasers' eligibility.

However, on November 11, Chengdu's Bureau of Housing and Urban-Rural Development had moved to ease the process by saying developers and property agents would be authorised to check the home purchase qualification when signing up deals online, according to a Chengdu property agent who asked not to be named.

The agent said the bureau also declared on November 11 that it would only verify the qualification when the housing ownership certificate had been registered and granted.

'The new policy [unveiled on November 11] was seen as a relaxation of home purchasers' verification, and therefore a relaxation of home purchase restrictions,' the agent said.

This was because a developer or agent that did not check too thoroughly might allow ineligible buyers to buy the units and hold them in the hope that the central government would relax its home restriction policy in the next two years.

The granting and registration of housing ownership certificates normally starts two years after the pre-sale of a residence.

On Monday, the bureau said on its web site that it would strictly implement the home purchase restriction policy and would ensure that all purchases met official criteria.

The mainland news service 21 CBH quoted a government official as saying that the relaxation of the verification regime was 'risky'.

Lee Wee Liat, regional property head of research at Samsung Securities (Asia), said the relaxation was shelved after Chengdu became concerned that its move might upset the central government.

'There is a strong divergence of views between local governments and central government,' Lee said.

Land sales, a major source of local governments' revenue, remain weak, with developers reluctant to buy land because of tighter credit, and property sales continuing to fall. Local governments are desperate to lure developers back to land auctions, and hoped to quietly relax restrictions to boost the market, according to the mainland property agent.

Lee said: 'This is probably not the only case in which local governments have tried to discreetly relax home purchase restrictions. Chengdu is probably one case out of many.' Last month, Foshan in Guangdong province said residents would be allowed to buy 'another home' if it cost less than 7,500 yuan a square metre, but reversed its decision just under 12 hours later.