China’s biggest cities aren’t done trying to tame their soaring property markets. Shanghai, where prices of new homes jumped 27 percent in July, is preparing to discuss a fresh round of curbs including potential restrictions on mortgages and loans to developers, according to people familiar with the matter. Beijing and Tianjin are also contemplating new measures to rein in prices, according to three of the people.
China’s top leaders, after a Politburo meeting led by President Xi Jinping last month, pledged to curb asset bubbles amid a renewed focus on financial stability. Having stabilized the economy with a mix of fiscal support and easy monetary stimulus, China’s leaders are now pivoting toward reform to stoke growth.
Cuts to the benchmark interest rate since November 2014 and other easing measures have helped spur a home buying frenzy in many of China’s biggest cities. In Beijing, prices of new homes jumped 21 percent in the past year, and in the adjacent northern port city of Tianjin, they rose 16 percent. In the southern business hub of Shenzhen, red-hot demand propelled prices up by almost 60 percent over the past year.
Smaller cities have also moved to cool housing prices. Nanjing, Jiangsu’s provincial capital, and Suzhou, a regional manufacturing base, earlier this month raised down-payment requirements for some buyers of second residences, adding to restrictions introduced in Xiamen, a southern port city in Fujian province, and Hefei, the provincial capital of Anhui.
In Shanghai, proposals under consideration include increasing down payments for some first-home buyers to 50 percent from 30%, and to 70% for people borrowing to buy their second property, according to the people, who asked not to be identified because the plans haven’t been publicly disclosed. The Shanghai branch of the China Banking Regulatory Commission earlier this month held meetings with banks to discuss the possible changes, said two of the people.
Shanghai’s municipal government and the city’s CBRC office didn’t immediately respond to inquiries seeking comment on the plans. Calls to Tianjin’s city government press office went unanswered, while representatives at Beijing’s government didn’t immediately return inquiries seeking comment.
Further curbs in Shanghai would come on top of measures taken earlier this year to slow price increases. In March, the city’s government tightened approval criteria for non-resident homebuyers, raised down-payment requirements for some second homes and banned unregulated lending. That round of tightening also limited homebuying eligibility in Shanghai to people who had paid income taxes and social insurance for at least five straight years, up from two years.
Shanghai authorities are also taking aim at runaway land prices. This year, land plots in the city have sold at an average floor price of 21,866 yuan a square meter, more than double the 9,842 yuan a square meter they fetched a year earlier, according to Yan Yuejin, a Shanghai-based analyst at China Real Estate Information Corp., a property data and consulting firm.
Shanghai on Aug. 17 sold a site north of Jing’an district for 100,315 yuan per square meter to Ronshine China Holdings Ltd., according to official land auction information posted online. That was a national record for a residential plot, according to China Real Estate Information. That spurred the cancellation of three land sales in the Pudong and Putuo districts in the past week.