|Girish Shetti |||Mar 27, 2016 03:39 PM EDT|
(Photo : Getty Images.) Authorities in Shanghai and Shenzhen have released a set of new policies to bring down rising property prices.
The municipal governments of Shanghai and Shenzhen on Friday introduced a new slew of policies to clamp down on rising real estate prices. These policies took effect from Friday.
In February, real estate prices in top-tier cities showed signs of overheating, with real estate prices in Shanghai surging about 20 percent year-on-year and prices in Shenzhen skyrocketing upto 72 percent.
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As per the new rules in Shanghai, property buyers who already own a home and are seeking a new home loan will have to provide 50 percent down payment - compared to 40 pecent required in the past. If the size and price of the prospective home surpass the criteria of an ordinary house, then the minimum down payment rises to 70 percent.
Buyers, who are not from Shanghai, categorized as non buyers, will have to prove they have paid income tax and social security premiums in the city for five consecutive years - as opposed to two years under previous rules.
The new policy rules bans developers and housing agencies from offering certain types of loans to buyers. It also takes a tough stance on individual and agencies indulging in price speculation and price-gouging.
Gu Jinshan, a director with the city's housing and urban-rural development commission, said the new regulations are meant to clamp down on surging prices in Shanghai's real estate market, which have been largely motivated by "irrational emotions," speculation and illegal practices by some real estate companies.
Shenzhen's municipal government also introduced similar rules, which also took effect last Friday.
According to new rules, a 40 percent down payment is mandatory for home loans for people buying their first home, but have already mortgaged a home for a period of two years. The same rule is applicable for people who already own one home, but have paid off their mortgages.
Non-local buyers will have to provide proof that they have paid income tax and social security premium for three consecutive years, as compared to one year under the previous rule.
Shenzhen's municipal authorities have also banned financial companies including online financial companies and small lending companies from offering margin lending to property buyers.
Shenzhen authorities also revealed plans of increasing land supply and constructing more government-funded houses to balance off demand and supply in the real estate market.
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