[SHANGHAI] Shanghai, China's financial hub, has raised the minimum required down payment and tightened eligibility for buyers of first homes in its latest move to cool a red-hot property market, state media reported on Tuesday.
Home and residential land prices have soared in many parts of China this year, prompting authorities to introduce a raft of restrictions on buyers and curbs on the ability of developers to raise fresh funds. The northern port city of Tianjin on Monday also rolled out fresh curbs on property purchases.
Starting on Tuesday, buyers of first homes in Shanghai would have to put a minimum downpayment of 35 per cent, up from 30 per cent, the state news agency Xinhua reported, quoting a notice jointly issued by Shanghai's housing and banking authorities.
The Shanghai Daily said the government also tightened the definition of first-time home buyers to exclude anyone who has owned a home in the city or applied for a mortgage from commercial banks or the government's Housing Provident Fund (HPF), even if they no longer own a home.
Meanwhile, banks have been ordered to raise interest rates by 10 per cent for home buyers borrowing from the HPF for a second time, with the maximum loan amount lowered by 100,000 yuan (S$20,601). People who have two mortgages would be banned from accessing HPF loans, it said.
"During 2010 and 2014, similar policies were also implemented in Shanghai, which were proved effective to control the property price gains," Zhou Hao, an emerging market economist for Asia at Commerzbank AG, wrote in a morning note.
He said the new policy "hints that Chinese authorities are seriously concerned about asset bubbles".
On Monday, Tianjin also announced stricter tightening measures to rein in a soaring property market, hiking the downpayment ratio for buyers of first and second homes.
The ratio was raised to 30 per cent for first-home buyers borrowing from banks from 20 per cent earlier.
Tianjin was among a number of cities that adopted tightening measures in the first week of October. Since then, some of the cities, such as Shenzhen and Wuhan, have stepped up measures with fresh curbs, although not as restrictive as those of Tianjin.