Beijing keeps brakes on for homebuyers

Local governments across the mainland are extending policies designed to restrict home purchases, triggering fears that the housing market will slide next year.

The Shanghai municipal government said on Tuesday that it would continue next year with measures that restrict the number of homes purchased, in an attempt to slow down housing development in the city.

Beijing, Guangzhou, Haikou, Shenzhen, Qingdao, Fuzhou, Changchun and Xiamen have all also announced that they would continue with restrictions on property investment.

The central government in January announced eight measures to slow the property boom, including curbs on lending and limits on the number of flats that can be bought by registered residents. In all, 46 cities have brought in home purchase restrictions, which vary from city to city. Eleven cities, including Fuzhou, Xiamen, Haikou and Qingdao, had previously said the policy would end on December 31. Now, however, the Ministry of Housing and Urban-Rural Development has suggested that local governments continue the policy of placing limits on home purchases.

Alan Jin, head of regional property research at Mizuho Securities Asia, said: 'It would trigger a revenge rally for housing prices if the restriction is taken away now. Local governments may deem it politically incorrect to oppose central government policy.

'The market is heading down and it will fall further with the current policy regime, where both high-end and mass-market demand is hurt.'

Prices fell last month in 49 of the 70 large and medium-sized cities tracked by the government, the National Bureau of Statistics said last week. This was a sharp rise on the 34 cities reporting price drops in October. The secondary market is also falling, with 51 cities witnessing dropping prices, up from 38 in October.