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Second-home buyers must dig deeper and that's no speculation
By Cao Qian and Zhang Fengming |
April 16, 2010, Friday
|
Print Edition
Print Edition
CHINA has raised the down-payment requirement on second-home mortgages to at least 50 percent from 40 percent.
It also reiterated that an extra 10 percent should be adopted on interest rates for these homes in the latest efforts to crack down on real estate speculation amid concern about asset bubbles.
For first-time buyers of apartments larger than 90 square meters, a minimum 30-percent down payment must be paid.
For those who buy three or more houses, even higher requirements on both down payments and interest rates should be levied.
The details were announced last night after a State Council meeting chaired by Premier Wen Jiabao on Wednesday.
"These are drastic measures introduced by the central government to rein in property prices, again reflecting central government determination to squeeze out speculators from the overheated housing market," said Song Huiyong, director of research at Shanghai Centaline Property Consultants Ltd, operator of the city's largest estate chain.
"At the same time it continues to give credit support to first-time buyers, especially buyers of small and medium apartments."
Song believes the minimum 50-percent down payment as well as an increased interest rate for second homes will greatly hose down speculators' interest.
"Finding a buyer will become more difficult as home prices have already soared to record levels," Song said.
The new policy would help reduce banks' potential risks to bad loans in case of a market correction, Song added.
China's urban property prices rose by 11.7 percent in March, the biggest year-on-year gain since July 2005, when the country doubled the number of cities it was tracking to 70, according to the National Bureau of Statistics.
In Shanghai, average price of new homes stood at 19,767 yuan (US$2,894) per square meter in March while that of existing properties, mainly houses, climbed to a record 16,200 yuan per square meter during the same period.
Overheating led to the central government stepping in with measures such as tightened credit policies and the introduction of a property tax, industry analysts said.
More banks are taking a tougher stance on property mortgages after government directives, making it more difficult for home buyers to lock in lower interest rates and easier down payments.
In February, the Bank of China became the first to tighten its mortgage policies, raising the bar for first-time home buyers by halting the 30-percent rate discounts.
More lenders soon followed suit.
Previously, almost all first-time home mortgage applicants could get access to the 30-percent rate discount and made only a 20-percent down payment.
Credit officers at a number of local banks reached by Shanghai Daily reporters yesterday said they had notyet received formal notices from their headquarters.
It also reiterated that an extra 10 percent should be adopted on interest rates for these homes in the latest efforts to crack down on real estate speculation amid concern about asset bubbles.
For first-time buyers of apartments larger than 90 square meters, a minimum 30-percent down payment must be paid.
For those who buy three or more houses, even higher requirements on both down payments and interest rates should be levied.
The details were announced last night after a State Council meeting chaired by Premier Wen Jiabao on Wednesday.
"These are drastic measures introduced by the central government to rein in property prices, again reflecting central government determination to squeeze out speculators from the overheated housing market," said Song Huiyong, director of research at Shanghai Centaline Property Consultants Ltd, operator of the city's largest estate chain.
"At the same time it continues to give credit support to first-time buyers, especially buyers of small and medium apartments."
Song believes the minimum 50-percent down payment as well as an increased interest rate for second homes will greatly hose down speculators' interest.
"Finding a buyer will become more difficult as home prices have already soared to record levels," Song said.
The new policy would help reduce banks' potential risks to bad loans in case of a market correction, Song added.
China's urban property prices rose by 11.7 percent in March, the biggest year-on-year gain since July 2005, when the country doubled the number of cities it was tracking to 70, according to the National Bureau of Statistics.
In Shanghai, average price of new homes stood at 19,767 yuan (US$2,894) per square meter in March while that of existing properties, mainly houses, climbed to a record 16,200 yuan per square meter during the same period.
Overheating led to the central government stepping in with measures such as tightened credit policies and the introduction of a property tax, industry analysts said.
More banks are taking a tougher stance on property mortgages after government directives, making it more difficult for home buyers to lock in lower interest rates and easier down payments.
In February, the Bank of China became the first to tighten its mortgage policies, raising the bar for first-time home buyers by halting the 30-percent rate discounts.
More lenders soon followed suit.
Previously, almost all first-time home mortgage applicants could get access to the 30-percent rate discount and made only a 20-percent down payment.
Credit officers at a number of local banks reached by Shanghai Daily reporters yesterday said they had notyet received formal notices from their headquarters.
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