Chinese citizens cannot buy more than one home in Beijing

Last Updated: Saturday, May 1, 2010 - 13:03

Beijing: China has banned its citizens from buying more than one home in the capital in an effort to rein in artificial demand created by the real estate sector and curb sky-high prices of apartments.

"One family can only buy one new apartment in the city for the time being," the Beijing municipal government said in a statement.

The order was passed with a directive to implement the central government policies banning mortgages for the purchase of a third or third-plus home.

The capital in the recent months witnessed soaring real estate prices even though many of thousands of sky scrappers dotting city skyline have large empty spaces.

Ever since the government lifted ban on private property about two decades ago, Chinese of all hues invested in more and more real estate sector buying more and more flats taking advantage of the easy lending policies adopted by the government controlled banks.

The Chinese government which has been cracking whip in recent weeks also banned mortgages to non-local residents who cannot provide more than one year of tax returns or proof of social security payments in Beijing.

Speculation is the main reason behind high home prices in Beijing, Chen Zhi, deputy secretary-general of Beijing Real Estate Association, told Xinhua.

"There exists a rather big bubble in the city`s real estate market. Housing has become more unaffordable for many," he added.

The measures will curb housing demand and reduce medium- and long-term risks for China`s economy and the financial sector, Ha Jiming, chief economist at China International Capital Corporation, said.

Home sales in some major cities have started declining as potential home buyers expect price falls in the wake of the tightening measures.

Property developers have been ordered to get official approval before accepting pre-payments for uncompleted homes and will be punished if they are found to be hoarding property to push up prices.

Beijing also planned to increase the supply of low-cost housing and has banned shareholders from applying for loans and providing finance and guarantees for property developers.

Local government agencies have been asked "fully understand harmful effects of overly fast rises in home prices for the sake of economic growth and social stability in the Chinese capital."

The government has also ordered an investigation into property projects that witnessed overly high sale prices or overly rapid rises in price.

PTI



First Published: Saturday, May 1, 2010 - 13:03

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