Beijing tightens property controls to cool prices

Beijing has stepped up measures to calm rising discontent over record-high home prices, vowing to boost supply for middle-income families and punish property speculators.

The uneven success of China’s efforts to rein in its buoyant property market has led some analysts to speculate the central government may unveil new measures nationwide to dampen house prices during a crucial plenum in November, including raising property tax levels.

Acknowledging that speculative buying was helping to drive up home prices, the Beijing government signalled in its latest measures it is ready to get tough with both buyers and sellers.

To meet genuine demand, a new category of housing for the middle-income will be introduced, a Beijing Municipal Commission of Housing and Urban-Rural Development official said.

These homes will cost more than public housing but will be 30 per cent less than normal residential real estate.

Seventy thousand homes targeted at middle-income families will be introduced this year and next and can be bought by migrant families that meet the government’s criteria, he said.

“We are making this move to further balance the supply of homes, support demand for owner-occupied apartments and stabilise market sentiment,” the Beijing housing commission said in a statement on its website late on Wednesday.

The series of measures are part of the Beijing government’s widening efforts to calm the red-hot property sector.

China’s home prices rose at their fastest in three years in September, data showed this week, fuelling concerns about a housing bubble that could threaten the health of the world’s second-largest economy.

In Beijing, where home prices are the highest in China, prices rose 16 per cent in September from a year ago. This is despite a four-year campaign by the government to cool the housing market by restricting home purchases, raising down payments and curtailing bank lending to the real estate sector.

Given that Beijing’s problem of surging house prices are more acute compared with other Chinese cities, it is not clear if the new property measures adopted by the capital would be implemented nationwide.

Speculators, developers on radar

Speculators found to have skirted government controls that bar residents from owning more than two homes would be stripped of their houses and prohibited from buying real estate in Beijing in the next five years, the Beijing housing commission said.

State news agency Xinhua said in a separate report that Beijing authorities would also bar developers from selling homes if they do not accept the government’s “guidance” on prices, suggesting officials would directly intervene to hold down prices.

“We will provide guidance for property developers to set prices reasonably,” Xinhua quoted the Beijing housing authority as saying indirectly. “For those that set their prices too high or do not accept government guidance, their sales will be suspended.”

Authorities will also tighten mortgage regulations to ensure that speculators are not granted loans and closely scrutinise sources of financing, the Beijing housing commission said.

Worth 16 per cent of China’s US$8.5 trillion economy, the property sector is a crucial growth driver in the country that propels growth in a host of other industries.

But the potential for social unrest due to unequal access to housing has led many to worry that China’s soaring property price problem is a potential threat to the country’s stability.