China Looks To Curb Soaring Real Estate Prices

In a move to help curb soaring real estate prices in China, the State Council has ordered that banks insist new property purchasers have at least a 30% deposit on their property. The finance ministry has also revealed that some tax breaks aimed at encouraging housing purchases may be scaled back.

These announcements are in addition to those made in April and are aimed at bringing Chinese real estate prices down to more affordable levels.

Before the announcement, property purchasers had to raise a 20% deposit on new home loans, or 30% if the property was larger than 90 square metres. The new measure sees all properties now having to have a 30% deposit on new home loans. Mortgages for third properties are currently banned and banks must ensure that other loans are not being used to fund property purchases.

The Chinese Government’s new measures are not unexpected as reports showed that property prices were buoyant in August and September meaning the April measures had little effect on the Chinese property market.

Some analysts also believe that more changes to the property market rules may be in the pipeline – there is currently an annual tax on commercial properties although residential property is exempted. It is understood that some local authorities are in talks about possibly removing the exemption for some classes of residential property.

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  1. From Chinese Investors Attracted To Overseas Property | Buying Foreign Property | Oct 21, 2010

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