Xi'an city cuts financing for home buyers to curb speculation

Beijing

THE historic Chinese city of Xi'an, an emerging tech hub, said it will pare back financing for home purchases as it unveils fresh curbs to contain speculation in its property market.

The capital of northwestern Shaanxi province has been one of the hottest property markets among China's major cities. Real estate prices in March rose 1 per cent from February, beating cities such as Beijing and Shanghai, official data showed.

Downpayments for first-time buyers borrowing from the government's housing provident fund to finance their homes will be raised to 35 per cent for apartments with floor area of less than 144 square metres, up from 25 per cent previously, the Xi'an Housing Provident Fund Management Centre said in a statement on its website.

The amount that home buyers can borrow from the fund will be lowered too, said the Xi'an authority, adding that new measures will take effect on May 13.

A two-year ban on sales of some second-hand homes in Xi'an expired earlier this month, meaning new supply can now enter the market and trade, which could further heat up the city's prices.

The booming market has strained the housing provident fund, a compulsory savings plan that Chinese nationals tap to partly fund their housing purchases. Xi'an will also ban the withdrawal of money from the fund to finance home purchases in other cities, the statement said.

With an eye on risks, the Politburo, the top decision-making body of China's Communist Party, stressed that the government will push forward on "structural deleveraging" - containing the build-up of debt across various sectors - and prevent speculation in the property market, in its latest meeting last week.

After unexpectedly resilient economic data for March following a raft of growth-boosting measures, some analysts have bumped up China's growth forecasts for 2019 and scaled back expectations of additional policy support measures. REUTERS