China remains tough against property market speculation

BEIJING - Local governments in China have been tightening regulations recently to curb housing market speculation.

In Southwest China's Chongqing municipality, authorities on Monday announced hikes in value-added taxes imposed on land used for certain non-residential housing, and canceled subsidies for first-home purchases.

The move followed similar policies announced in other big cities. In Changsha in Central China's Hunan province, authorities suspended housing purchases by enterprises in certain restricted areas.

In Xi'an and Hangzhou, sales to enterprises and public institutions were also suspended.

During previous years, rocketing housing prices, especially in major cities, have fueled concerns about asset bubbles. To curb speculation, local governments passed or expanded their restrictions on house purchases and increased the minimum downpayment required for a mortgage.

Some cities have put in place a lottery-like registration system, allowing only the winners to purchase homes.

To increase the chance of winning, some individuals registered companies so that they could get more quotas or bypass regulations restricting individual home purchases.

Recent local housing control policies are targeted at such speculation, said Yan Yuejin, researcher with E-house China R&D Institute, a property research agency.

The country's policy makers have reiterated that "houses are for living in, not for speculation" and have demonstrated their will to keep a lid on housing prices.

Starting this month and lasting through the end of December, 30 cities, including Beijing, Shanghai, Guangzhou and Nanjing, will be inspected for real estate irregularities, according to an earlier notice jointly issued by the Ministry of Housing and Urban-Rural Development and another six central departments.

Irregularities include fabricating information on housing sales, publishing fake advertisements and artificially inflating housing prices, market manipulation and hoarding unsold homes.

With continued tough policies, home prices in major Chinese cities have largely remained stable.

On a yearly basis, new residential housing prices in four first-tier cities declined 0.6 percent from a year ago in May, the fourth straight decline, data from the National Bureau of Statistics showed.

Meanwhile, home prices in 35 third-tier cities were cooler. There was a slowdown in price growth for four months in a row in new houses, and for 10 months in existing ones.

According to Yan, as government policies that encourage home-leasing gradually are implemented, many potential home buyers choose to rent homes instead, which will help keep housing prices rational.