Shenzhen steps up property buying curbs as Beijing moves to boost growth

Shenzhen has slapped on more property purchase curbs as first-tier mainland Chinese cities show no sign of easing controls on the sector despite Beijing’s shift towards a more vigorous fiscal policy to boost growth.

The new measures announced on Tuesday to target property speculators included restricting property owners to sell their flats for three years after purchase, banning purchases by companies and organisations to plug a loophole to skirt current restrictions, and tightening loan policy for divorcees of less than two years amid a growing number of people using a divorce to secure more loans.

Last week, major banks in Shenzhen raised their mortgage rates for first-time homebuyers to 15 per cent from 10 per cent, even as the central government said the national campaign to reduce leverage would continue at a measured pace.

The Shanghai mayor also stressed last week that the city has no intention to lift existing buying and mortgage curbs. Beijing reiterated that buying and selling restrictions on quasi-residential properties – flats built on commercial land with a shorter 40 to 50 year lease term – will not be relaxed.

“Previous easing cycles have always included stimulating the property market, as investment in the sector is an important driver of China’s economy. But there’s no mention in this cycle, and the pace for redevelopment projects is also controlled. I think China will avoid the old path of using a property bubble to boost economic growth,” said Jiang Chao, chief economist with Haitong Securities.