Shenzhen tightens restrictions on home purchases as prices spike

Beijing

THE southern Chinese technology hub of Shenzhen announced new restrictions on home purchases on Wednesday, in a fresh attempt to arrest sharp price rises and curb speculation in a market fuelled by an influx of talent and short supply.

The city government said in a statement that only people who have lived in the city with residency permits and made tax or social security contributions for three years are eligible to buy homes there.

Previously, anyone who had obtained a residency permit for the city could buy property.

The city also made it harder for people to divorce in order to buy homes, addressing a loophole used by families in China to circumvent restrictions, and tightened the transaction tax policy on big apartments.

Despite the economic fallout from the coronavirus pandemic, Shenzhen has seen a sharp rise in housing prices this year, as loose residency requirements aimed at attracting talent and tight home supply lead to frantic buying. The city is home to tech giant Tencent.

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Second-hand home prices in the city of 13 million people rose 12 per cent in May from a year earlier, official data showed, the second-highest gain among 70 major cities in China.

"The new policy is quite stringent, and it sent a strong signal that the government will tame excessive home price rises and prevent speculation (despite) the backdrop of broader policy easing after the coronavirus," said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.

He also said fears of further tightening could spark panic buying, adding that the key to managing the property market in Shenzhen is expanding the supply of homes in the city. REUTERS