China's latest housing restrictions will not apply to first-time buyers

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By CGTN's Ming Tian

China's policymakers have taken on a number of regulations to cap housing prices. The new round of measures is aimed at curbing speculation and investment demand. Analysts said people looking for their first homes would not be affected by the restrictions.

Chinese authorities are determined to cool off sizzling home prices. Dozens of local governments have doled out curbing measures since March. As a result, people in more than 30 cities must hold their property for at least one year before making a sale.

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For instance, over 10 cities maintain that people can only put their property on sale after holding home-registration for two years. Some are even asking for a five-year non-saleable period if home owners are not city residents.

Analysts say what makes the restrictions different from the past is governments are reining in suppliers, as “the policy restricts both developers and homeowners on prices and the timing of the sales.”

“The curbing measures are targeting the supply side of the market. We want to change the supply and demand of the housing market and rebalance the dynamics into a more ideal situation,” said Liu Weimin, a researcher at Development Research Center of the State Council.

Many are worried policy curbs will not only cap prices, but also cool transaction volumes. But Liu argued that the rigid demand is immune to the curbs, as people looking for their first homes still enjoy the same policy favors as they used to.

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“We are only curbing the demand for investment and speculation. For people looking for their first home, the policies maintain favorable preferences on down payment and mortgage rates. We would even consider fresh measures to help people to improve their living conditions,” said Liu.

So far, the crackdown on investment demand seems to be working. Take Beijing for example, where newly issued mortgages hit 22 billion yuan (about 3.2 billion US dollars) last month and 85 percent have gone to first-time borrowers.

Moreover, according to data released by China’s National Bureau of Statistics, prices increased in 56 of 70 cities monitored, down on the 58 previously reported in April. Analysts believe the policy will help squeeze price bubbles in the market, while keeping real demand for living spaces intact.