(Bloomberg) -- China's capital city told home buyers to put more money as down payment as part of a wider effort by the world's second-biggest economy to rein in prices and cool the property market.
The Beijing administration raised the down payment for first-time purchasers to a minimum 35 percent of the price, from the 30 percent earlier, while it increased it to at least 50 percent for second-time buyers, according to a statement on the city government's website. The decision by Beijing came a day after similar measures by Hangzhou, which also capped land auction prices to give a maximum of 150 percent premium.
Home prices the world's most populous nation rose the most in six years last month, defying new policies to curb excessive speculation in big cities and government warnings about asset bubbles. While gains have been most pronounced in big cities like Shenzhen, where home prices are up about 60 percent in the past year, smaller cities such as Xiamen have also seen runaway growth, where prices have risen more than 38 percent.
Beating Peers
“Government concern over home-price bubbles is evident in the tightening measures,” Patrick Wong, an analyst at Bloomberg Intelligence, wrote in a report. The steps “may diminish sales volume growth” in the fourth quarter, he said.
Compared with other property markets, China's big cities still beat global peers, with Shenzhen and Shanghai trailed by pricey San Francisco and London over five years, and leaving Tokyo and New York far behind.
Beijing's government also said it will further increase residential land supply and limit prices for property projects in a trial to curb the surge. It said it will also crack down on illegal activities. New home prices in Beijing jumped 23.5 percent in August from a year earlier, according to the National Bureau of Statistics.
Beijing's down payment rate is the highest among all Chinese cities, said Zhang Hongwei, a research director at Shanghai-based Tospur Real Estate Consulting Co.
“Shanghai and Shenzhen will also follow suit,” said Zhang.
To contact Bloomberg News staff for this story: Gao Yuan in Beijing at ygao199@bloomberg.net. To contact the editors responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net.
With assistance from Gao Yuan
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
