Economy

China suspends loans to third home buyers

(Xinhua)
Updated: 2010-09-29 18:59

BEIJING - China will suspend bank loans for third home purchases in the near future, as the government moves to roll out further measures to check soaring property prices, Xinhua learned Wednesday.

Property tax pilot programs will be stepped up, and then extended to the whole country, sources with several departments of the central government told Xinhua Wednesday.

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All first home buyers will have to pay a down payment of at least 30 percent of the purchase price, according to the new rules.

Previously, according to rules issued on April 17, only first-time buyers purchasing an apartment above 90-square-meter in area had to pay a 30 percent down payment.

For second home buyers, the policy will remain unchanged: a 50 percent down payment and a home loan interest rate no less than 1.1 times the benchmark interest rate.

Officials will be held responsible if they fail to implement the new policies.

"The new rules basically fully carry out the ten rules issued on April 17 to cool the property market. Still, some requirements go even beyond the previous ones," said Yang Hongxu, an analyst with Shanghai-based E-house China Research and Development Institute.

"Under the new rules, lending to third home buyers is banned across the country, instead of just in some cities with high home prices," Yang said.

The new rules require lenders to step up monitoring of "consumption loans," to ensure they are not sneaking into the property market, Yang added.

Moreover, if cities are suffering from soaring home prices and strained supply, limits may be imposed on "the total number" of properties bought by a single family, according to the new rules.

"This requirement is tough and can be applied in cities like Shanghai, Beijing, Shenzhen and Hangzhou. It may limit a purchaser to buying no more than one apartment within a certain period of time," said Yang.

Another rule "adjusts" preferential tax policies for home purchases and taxes, including personal income tax, possibly raising taxes on trade in homes, Yang said.

Su Xuejing, an analyst with Changjiang Securities Co. Ltd., said, "The new rules do not exceed our expectations. We expect more tightening policies, with details to come over the next day or two."

Yang said China's property market will be more subdued in October than September, adding that property trade volume over coming months will be down compared to August and September.

Chinese property stocks closed down Wednesday.

The sector dropped 1.01 percent, with only 22 of 150 property registering a rise, according to a Dazhihui index, a widely-used stock analysis tool.

China Vanke Co., the nation's biggest listed property developer, dropped 1.01 percent to 7.81 yuan per share.