The southern Chinese city of Zhuhai has introduced restrictions on housing purchases in a sign of the government’s resolve to rein in the property market.
The move on Tuesday came even though prices have started to decline across much of the country.
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Similar restrictions have been rolled out in other big cities since last year, including limits on the number of units households can buy, curbs on purchases by non-residents and caps on the amount developers can charge for apartments.
But a big drop in sales volumes and recent price falls in leading markets had led many to assume Beijing would start to ease restrictions.
Shares in most leading Hong Kong-listed Chinese property developers rebounded by between 30 and 80 per cent in the fortnight to last Friday on expectations of imminent easing, although most were still down by more than a third since the start of the year.
Shares in listed developers such as Evergrande, Longfor and China Vanke fell on Tuesday in Hong Kong and Shanghai on news of the Zhuhai restrictions and reports in Chinese media that some large developers were offering big discounts on developments.
Many in the sector fear such discounts could trigger a wave of price cuts amid weak demand just as a large number of new apartments is expected to come to market across the country.
Adding to those fears, data from the China Real Estate Index System released on Tuesday showed average residential property prices across 100 leading cities in China fell 0.23 per cent in October from the previous month, the biggest decline so far this year.
Average prices were still up 5.21 per cent on the same month a year earlier, but this was a slower increase than the 6.16 per cent rise in September.
For most Chinese citizens the rapid price rises of the past few years have put apartments in big cities far out of their reach and the government wants to bring prices down gradually to make them more affordable.
But because of the importance of real estate to the wider economy – housing construction is estimated to make up one quarter of investment and 10 per cent of the country’s gross domestic product – Beijing is wary of triggering steep price declines.
On Saturday, Wen Jiabao, the Chinese premier, said Beijing was looking for a “reasonable correction” in prices and would resolutely continue its property tightening strategy while forcing local governments to implement existing housing purchase restrictions.
Zhuhai, an industrial city in Guangdong province, announced on Tuesday that people who had not paid taxes or social insurance in the city for more than a year could not buy apartments there, while local families were limited to buying one home unit each.
It also imposed a cap on home prices of Rmb11,285 per sq metre for the rest of the year. Any developer asking for higher prices would not be given permits to sell their developments.
China imposes curbs on buying property