Home prices continue to rise

Local governments in all of these four key cities said they would strictly implement the 20 percent tax on capital gains from property sales if a homeowner sells the property within five years of its purchase and the apartment is not the only one owned by the family.

The authorities in Beijing said that single adults with hukou - registered permanent residence - in the city are allowed to purchase only one apartment, as opposed to two previously. And the government will also not grant sales licenses to projects priced "much higher" than the average rate in the region.

Banks in Shanghai will be prohibited from granting loans to residents who own two apartments and are attempting to buy more. The down payment and mortgage rates for second-home purchases may be further increased, depending on market conditions.

Shenzhen plans to limit price increases of new properties below the city's per capita disposable income target, which was set at 9 percent by the local legislature earlier this year.

The regulations in Guangzhou did not mention detailed measures to limit property prices. But the government said land for the construction of small and medium-sized dwellings will account for at least 70 percent of the total for residential use.

Other cities only announced their house price target for 2013, without mentioning detailed measures to implement the 20 percent taxation policy.

Zhang Dawei, research director at real estate brokerage company Centaline Group, said transactions may tumble this year, and prices are set to stabilize.

"If those policies could be implemented for more than six months, prices may drop by more than 20 percent," said Zhang.

According to Zhang Lei, an analyst with real estate brokerage company Century 21st, the regulations will lead to a wait-and-see scenario in the market in the short term, and have a major impact on the pre-owned home sector.

huyuanyuan@chinadaily.com.cn