Shenzhen and Shanghai Leads Among Chinese Cities in Announcing New Regulations
Shenzhen and Shanghai is leading among major Chinese cities in announcing new restrictions in hopes to cool down housing prices, although analysts are suggesting to do a balanced supply and demand is a much more ideal solution. Both cities has announced the new regulations last Friday which showed local government’s plan in resolve in controlling soaring prices.
Shanghai new rules stated that local families having one property will have to pay 50 percent down payment when buying a second home. Minimum down payment will increase to 70 percent if the home is above 140 square meters or priced more than 4.5 million yuan and when the home is located in the inner core of the city. Barriers for buying a home is even tighter for families living in Shanghai that have no permanent residency since they are required to pay taxes for at least five years straight before buying a property in the city, compared with the previous requirement of two years of tax payments. Local buyer in Shenzhen are required to pay 40 percent down payment for a second home and non local families are allowed to purchase only one apartment after paying taxes for three years in a row.
Last Friday, Nanjing and Wuhan also released stricter measures in granting mortgage loans. New policies are in response to the central government’s move for implementing different measures based on their own situations in regulating and controlling property markets. February showed a 56.9 percent year on year growth in Shenzhen which recorded the biggest new home price increase among the 70 Chinese cities, followed by Shanghai with 20.6 percent. Second hand home prices also showed a similar trend with Shenzhen showing a 54.2 percent year on year growth followed by Shanghai with 20.3 percent.
An escalating difference in home price growth, since first tier and popular second tier cities have grown much higher than other cities and the difference have been carried on. Measures taken by the Central Government reduced transaction volumes and cool growth prices, but the appetite for housing stock kept prices firm.