REGULATORS have introduced new rules Sunday to curb the purchase of new commercial property in Beijing by individuals in the latest step by authorities to cool the market.

    China has intensified its crackdown on property speculators by rolling out much harsher measures in big cities, while extending curbs to nearby satellite cities in an effort to contain resurgent demand from frenzied home buyers.

    Recent weeks have seen the biggest wave of tightening of home purchases and lending rules since October, a sign that prices remain strong in the bigger markets as investors gamble the measures so far won’t contain prices.

    Concerned that soaring prices could cause a crash in the property market, policymakers ordered a slew of tightening measures in about 20 cities in October, although some analysts noted those measures were less severe than seen in previous cycles.

    Price gains slowed for months after the measures were implemented, but the market started to pick back up again last month. Official data also showed property sales unexpectedly surged in the first two months of the year.

    On March 17, the Chinese capital of Beijing slapped a barrage of unprecedented measures including hiking the downpayment ratio to as high as 80 percent for second homes, a significant move that has led to multiple cities following suit.

    China has pledged to keep the property market stable in 2017, after a furious property boom last year that saw price gains soaring to a five-year high. The Central Government recently has also ramped up the rhetoric with multiple top government bodies and officials reiterating that the country would control rapid flows of bank credit to the sector to contain risks.

    While prices have inflated to record highs in the biggest cities, China’s smaller third- and fourth- tier cities still largely face a gloomy housing glut.

    Restrictions on commercial property for individuals

    The lastest rule to cool the market is to curb the purchase of new commercial property in Beijing by individuals.

    New commercial plots can now only be sold to enterprises, public entities and social organizations, said a statement issued by Beijing’s banking, industry and commerce, housing and urban planning authorities.

    The statement posted on the Beijing Municipal Commission of Housing and Urban Rural Development website Sunday said that personal loans for buying commercial property have also been suspended.

    Only pre-owned commercial property can be sold to individuals, who have to prove income tax payments for five consecutive years and hold no property, the regulators said in their statement.

    The smallest unit available should be a minimum of 500 square meters and real estate agencies that falsely advertise commercial plots as housing will be punished.

    The Beijing News reported Sunday that 28 real estate agencies were shuttered for driving up prices, among other things.

    Sales of tiny residential

    spaces banned

    Beijing’s land authority also said Friday it has banned the registration of “abnormally shaped” residential spaces, such as extremely small rooms, passageways or garages, effectively blocking the sale of such properties.

    Those spaces “don’t serve practical living functions,” the Beijing Municipal Bureau of Land and Resources said in a post on its official Weibo account.

    Local media have reported cases of tiny residential spaces being sold in central Beijing at sky-high prices. Buyers are mostly parents with school children.

    Beijing policies dictate school enrolment to be largely determined by the location of the student’s home.

    Registration of a residential space is the last and most crucial part of a sale. Property buyers are only granted ownership certificates when the registration is successful.

    The ban took effect Thursday, it said.

    Tighter mortgage checks,

    no fake divorces

    China’s central bank said Friday that banks must strengthen mortgage risk management, and that includes cracking down on home buyers rushing to get divorced to skirt second-home purchase rules.

    Individuals who have been divorced for less than a year should not qualify as first-home buyers, and banks should not extend property loans to such individuals under first-home policies, the People’s Bank of China (PBOC) said.

    Last week, the Beijing Municipal Government imposed an unprecedented series of curbs, including hiking the minimum down payment ratio on second-home purchases to 60-80 percent. It kept the rule on first-home buyers unchanged. First-home buyers need only pay a minimum of 35 percent.

    “Recently there have been more households that use divorces to enjoy first-home mortgage policies,” the Beijing operations office of the PBOC said in a notice posted on its website.

    “This has not only affected policy effectiveness, but will also lead to problems such as financial disputes and add to credit risks borne by commercial banks.”

    Under the PBOC guidelines for Beijing, effective immediately, banks were also told to strictly check the source of down payments by individuals purchasing property, carefully assess the ability of borrowers to repay loans, and improve on their residential property valuations.

    The PBOC and the Beijing branch of the banking regulator will conduct regular inspections and spot checks on how the measures are implemented by banks, the notice said, stressing that lenders that break the rules will be “dealt with seriously.”

    New residential home prices in Beijing fell 0.1 percent month on month but rose 24.1 percent year on year in February, while prices for pre-owned homes rose 1.3 percent compared with January and 32.2 percent compared with those in 2016, official data showed.

    Growth in prices of Beijing homes in the resale market was the third-fastest among Chinese cities in February, official data showed, mostly driven by speculators.

    Tightened rules in other cities

    Following Beijing, a string of cities have rolled out tightened rules to curb property market speculation since March 18.

    Guangzhou’s city government said unmarried people and nonlocal residents will only be allowed to buy one home in the city from March 18. The minimum down payment on second homes will also be raised to 50 percent.

    Hot markets Hangzhou and Nanjing were among other major cities to step up their fight against property speculators, as authorities fret over resurgent price growth that has shown only modest signs of abating.

    Speculators also appeared to be venturing into smaller markets that have more relaxed housing purchase policies. Surging price growth in satellite cities near some of the country’s sprawling metropolises have prompted authorities in those areas to impose purchases bans.

    Shijiazhuang, for example, capital of Beijing neighbor Hebei Province, on March 18 imposed home purchase restrictions for the first time since 2014, according to a post on the website of the Shijiazhuang government.

    Nonlocal residents will be limited to one house in the city, and the minimum down payment for residents on second homes was raised to 40 percent.

    Shijiazhuang home prices rose 18.2 percent year-on-year in February and 0.2 percent from January.

    (SD-Agencies)