New | Guangzhou, four cities follow Beijing’s lead to curb home purchases

Five mainland Chinese cities have followed Beijing’s lead in tightening home purchase restrictions, rolling out extensive new measures over the past three days to curb speculative buying.

Within a few hours of Beijing introducing the nation’s harshest curbs on Friday afternoon to dampen surging home prices, Shijiazhuang, the capital of neighbouring Hebei province, the city of Guangzhou in southern China, and Zhengzhou, the capital of central Henan province, rolled out tighter buying curbs.

Over the weekend, Hunan’s capital of Changsha and Baoding, a city 150 kilometres southwest of Beijing, both imposed stricter cooling measures, bringing the total number of mainland cities that have introduced such measures in March to 18. These include all the major cities in China and smaller cities surrounding Beijing and Shanghai.

An analysis of the policy details put forward by each city indicates that they aim to stamp out speculative demand that was blamed for the latest surge in home prices, with speculators taking advantage of loopholes in property curbs that have been put in place since October.

For example, many cities limited local residents to owning two or three homes while non locals could only buy one. The number of years non local residents had to pay into the social security fund to gain purchase eligibility was also raised, while the urban areas subject to purchase restrictions were expanded. In addition, local governments increased the down payment ratio requirement.

However, these policies seem mild compared with those imposed in Beijing on Friday. Down payments for second-time buyers of private sector-developed homes were raised to at least 80 per cent of the purchase price, up from 70 per cent, and the definition of “second-time buyer” was broadened to include those who have any mortgage history, regardless of where or whether they currently own a flat.