Nanjing to cap home price rises

Overview of Nanjing, capital city of East China's Jiangsu province, Dec 4, 2015. [Photo/VCG]

The local government of Nanjing, capital of East China's Jiangsu province, is expected to adopt new policies to rein in the rapid rise in home prices, according to a report by the 21st Century Business Herald.

The city plans to cap the annual increase of residential buildings with a price tag of less than 20,000 yuan ($3,085) per square meter by 12 percent, the report said.

For residential projects quoted at 20,000-30,000 yuan per square meter, the annual price increase will be limited to a ceiling of 10 percent, and the increase for houses priced over 30,000 yuan per square meter should not exceed 8 percent, sources with the newspaper revealed.

According to the latest statistics by the National Bureau of Statistics, the average prices of new residential buildings in Nanjing rose 3.5 percent from the previous month in March, registering the 13th consecutive monthly increase. Compared with the same period last year, the prices soared 17.8 percent, second only to Beijing, Shanghai and Shenzhen.

China's central bank cut the minimum down payment for first home purchases to 20 percent of the housing loans in cities excluding Beijing, Shanghai, Guangzhou, Shenzhen and Sanya in February in a bid to facilitate destocking.

Despite the overall policy orientation of destocking, it is notable that more cities have joined in the rank of tightened regulation.

Suzhou, also in Jiangsu, issued new rules that the rise of new housing projects should be no more than 6 percent within six months and 12 percent within 12 months on March 18.

On March 25, Shanghai required local families with one property to pay a minimum 50 percent down payment for a second home, with the down payment raised to 70 percent if the house is either above 140 square meters or priced above 4.5 million yuan located within the inner ring.

The home-buying barrier is even higher for families with no permanent residency, because they are required to pay tax for at least five years in a row before buying a property in the city, compared with the previous requirement of two years in total.

On April 1, Langfang, in North China's Hebei province and 90 kilometers from central Beijing, adopted a series of restricting policies for home purchases. According to the new rules, non-local families can only buy one house with down payments no less than 30 percent.

Analysts said the rise in housing prices in Langfang, Nanjing and Suzhou were partly propelled by investment demand. Amid fluctuation on the stock market, more capital has flowed into the property market in hotspot cities.

Under this context, a unified property market control policy can hardly achieve the desired results. In cities where house prices increase by large margins, the odds are high for further tightening policies, analysts said.