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Fearing a new property bubble, the Chinese government this week imposed new measures to restrict foreign investors and speculators.
In total, the government called for 11 measures, including measures to curb the flow of so-called “hot money” from foreign markets. “Excessively rising housing prices” in some cities call for “great attention,” the government announced.
As part of the plans, the government is moving to “strengthen monitoring of capital flow and trans-boundary investment and financing activities so as to prevent credit from entering the real estate sector illegally and stop overseas speculative funds from jeopardizing China's property market,” according to a government release.
The government will also move to “guide reasonable housing consumption and curb speculative investments.” Earlier this month the government imposed a sales tax on homes sold within five years of purchase, increasing the time period from two years.
"With the recovery of the real estate market, such problems as excessively rising house prices have recently emerged in some cities, which call for great attention," said the notice.
However, the government didn’t change the requirement for a 40 percent down payment on second homes, which some analysts thought might rise to 50 percent.
“Today’s property measures are less stringent than expected as the government didn’t raise the down-payment ratio, which was what the market most feared,” Beijing economist Xing Ziqiang told Bloomberg. “Property-market growth is too important for local governments’ revenue and the nation’s economic recovery.”
The measures come on the heels of a report from Knight Frank, which showed dramatic increases in prices in most Chinese cities. Average home prices jumped 68 percent in Shanghai last year, while Beijing posted a 66 percent increase. Most of the 10 cities surveyed showed increases of more than 20 percent.
