Shanghai tightens restrictions on home purchase

BEIJING - Authorities in East China's Shanghai city have shut another door for house buyers seeking loopholes in local restrictions on home purchase in a move to tighten controls on the property sector, a Chinese newspaper reported Friday.

People without registered permanent residence permits in Shanghai have been forbidden to buy houses in the city even if they pay social insurance premiums at the required amount but not over the required period of time, the Beijing-based China Securities Journal reported.

For non-registered permanent residents to qualify as a legitimate home buyer in Shanghai, one needs to provide certification of paying individual income taxes or social insurance premiums there for an aggregated period of at least one year within the past two years.

However, some buyers who did not pay insurance premiums for that long simply supplemented the required amount to the already paid premiums and were able to make purchases, creating a grey area in the regulation, the report said.

Such acts were no longer allowed from June 15, the newspaper said, quoting sources from local property transaction centers and the Shanghai housing regulatory bureau.

The move followed a ban last July on similar circumvention activities on the individual income tax requirement and came amid government efforts to cool speculation on a relax of property controls.

Since 2010, China has implemented a raft of measures to rein in runaway house prices, including restrictions on home buyers, higher down-payments, property tax trials and the construction of low-income housing.

As China's economy slowed, there have been growing concerns that, if China's housing prices fall too much and too soon, it may hurt the country's overall growth.

However, the Ministry of Housing and Urban-rural Development reiterated earlier this week that the country will steadfastly continue with its property market regulation policies.

The country's central bank and the China Banking Regulatory Commission both clarified last week that they had made no changes on the home lending policies and risk-weighting for individual mortgage loans.

The National Development and Reform Commission (NDRC) said last week media reports were purely fabricated quoting NDRC sources as saying loosening the grip on the property sector was "a second card to save the market."

New home prices in several major Chinese cities continued to fall in May, but more cities saw slight price increases from the previous month, official data showed.

In May, 55 of a statistical pool of 70 major cities saw year-on-year drops in new home prices, expanding from 46 in April this year. However, six cities, up from three in April, saw prices rise month-on-month, according to official statistics.