China called for higher down payments and interest rates for second-home mortgages in cities with “excessively fast” price gains and ordered stricter enforcement of taxes on sales as authorities step up a three- year campaign to cool the property market.
The People’s Bank of China’s regional branches may implement the measures in accordance with the price-control targets of local governments, the State Council, or Cabinet, said in a statement on its website yesterday. Cities facing “relatively large” pressure from rising house prices must further tighten home-purchase limits, according to the statement.
China’s new-home prices rose for a ninth straight month in February, SouFun Holdings Ltd. (SFUN) said yesterday, 10 days after outgoing Premier Wen Jiabao told local authorities to “decisively” curb property speculation and ordered cities with rapid price gains to limit home purchases. Li Keqiang, No.2 in the Communist Party hierarchy, is set to replace Wen during legislative meetings that start March 5.
“This is a final effort by Premier Wen to put a stamp on the direction of policy before he leaves office and the message is clear: there should be no relaxation of property market controls,” Mark Williams, an economist at Capital Economics Ltd. in London, said by e-mail. “This is a sensible policy. Even allowing for the construction slowdown of last year, the real estate sector remains on an unsustainable path.”
Property controls “are still in a crucial period and expectations of further gains in housing prices are increasing,” the State Council said.