Regulating property prices: More cities get in on the act

It is a coverage on a recent hot topic - China's over-heated property market. Local governments have announced detailed real estate regulations following the central government's recent plan to cool down the market. While this has had a mixed response, the fact that the growth in the average price of housing accelerated in March, underscores the challenge the government is up against.

Following Beijing and Shanghai's lead, a string of local governments have come out with their own plans to control the volatile housing markets in their own regions.

But the central government's requirment that they provide "detailed regulations", has meant most local government have come up short.

For example, Nanjing's "detailed regulations" to cool down its real estate market composed of exactly 154 characters.

Many cities haven't touched on the issues in focus, such as whether to impose a 20% home resale tax, increased down payment for second and more homes or raised mortgage rates.

But the gist is clear. Most cities have pledged to limit the increase in prices of new properties below the cities' per capita disposable income targets.

However, not everyone is confident that this will work out.

Tu Tengjing, real estate businessman, said:"What can be predicted is that if a 20% home resale tax is levied, buyers will just swarm to the new homes market. And prices of new homes will skyrocket."

By vowing to cool the market down, the government new policy, to some extent, has pushed the buyers and sellers to complete their deals as quickly as possible before the new regulations kicked in.

According to the China Real Estate Index System, prices of second-hand homes rose 2.81% from February this year. On a year-on-year basis, second-hand home prices rose 18.06% in March.

Jiang Yuping, deputy dir. of Nanjing Equity Market Office, said:"We have seen about 7 or 8 times more real estate transactions this month. We've had to work overtime to deal with the increased volumes. But we expect the number of transactions to taper off soon."

Many cities did see fewer transactions immediately after the new regulations came out.

A Tianjin resident said:"After seeing the news, I've decided not to buy a home at the moment."

A Tianjin resident said:"I will hold off my purchase. I'm going to wait and see."

The central government had been trying to put brakes on the fast moving property market for the past year. And now it has finally come out with a plan to do so. It remains to be seen what long term impact this will have on China’s real estate market in the coming years.