Shenzhen announces tighter property market regulation

Shenzhen announced its latest round of restrictions on Tuesday to curb housing market speculation, following the recent moves by other major cities in China.

The new curbs are expected to stop enterprises and institutions from purchasing commodity housing, restrain speculation on business apartment market and deter individuals from making speculative choices, such as a "fake divorce".

In a statement, it said enterprises, institutions and social organizations cannot purchase commodity housing in the city from Tuesday.

Commercial apartments built on all kinds of new supply lands can only be rented but not sold, according to the statement. And an enterprise's overall holding period of a business apartment should be consistent with the time limit of the land use right, with the single lease term no longer than 10 years.

In addition, from Tuesday, business apartments newly purchased by individuals, enterprises, institutions or social organizations are prohibited from transferring within five years from the date of obtaining the property right certificate.

Wang Feng, director of Shenzhen Real Estate Research Center, said recently more than 20 percent of the total houses of some hot real estate projects in Shenzhen were purchased by companies, according to a report by 21st Century Business Herald.

In addition, some buyers who have a large amount of money entered the house purchasing lottery system by registering companies, which squeezes people's real demand, Wang said.

For individuals, the new policy restricts both sale and loan limits.

It forbids the transfer of commodity housing newly purchased by households (excluding housing for talents and residential housing for of urban low-income families) within three years from the date of obtaining the property right certificate.

The policy requires individual buyers who apply for business loans or provident fund loans within two years from filing for a divorce need to make an initial payment no less than 70 percent. Among them, for the ones who have no housing loan records before, if they can provide a certificate of no housing before the divorce or just one house held by the family before the divorce, the down-payment requirement can be lowered to no less than 30 percent and no less than 50 percent respectively.

"Shenzhen upgraded its regulation comprehensively this time. The four major policies, aimed at speculative demands, mean to curb the rise of housing prices and hit investors' expectations on the market," an industry insider said, according to a report by Securities Daily.

Zhang Dawei, chief analyst with real estate agency Centaline Property, told Securities Daily that except for a small number of apartment investment enterprises, most enterprises that purchase residential housings are speculators.

"The regulation on banning enterprises and institutions from purchasing commodity housing may be adopted by more cities, as it is an effective way for easing the tension between market supply and demand," Zhang said.

"The launch of this policy is timely and necessary," Wang told 21st Century Business Herald.

He said banning enterprises from purchasing commodity housing can block the loopholes, stop individuals from bypassing the purchase limit, help maintain the fairness of the lottery system and prevent enterprises from "contending with people for profits".