China's surging housing market is expected to cool, at least for a while, as a new package of policies that include purchasing restrictions, property taxes, and the availability of government-subsidized flats are implemented nationwide, analysts say.
With the government's latest tightening measure, more than a dozen Chinese cities, including Beijing, Shanghai, and Tianjin, have capped the number of apartments a family can buy, especially raising the level of difficulty for non-residents to buy apartments for investment.
The central government also raised the down-payment requirement for second home purchases and the lending rates, while Chongqing and Shanghai introduced the country's first-ever property taxes.
Nie Meisheng, the Director of China Real Estate Chamber of Commerce, said that the new package of policies puts the brakes on the real estate sector. Home sales are expected to drop significantly, but the prices are likely to stay steady.
"It is necessary to implement tightening measures as bubbles have appeared in the housing market," Nie said.
Song Ding, a specialist in real estate market analysis with China Academy of Comprehensive Development, said that the focus of this round of tightening seems to have shifted from curbing housing speculation to curbing the general demand for apartments.
The goal is to tightly control the amount of capital entering the property market in a bid to prevent bubbles and an ensuing collapse that would destabilize the macro-economy, Song said.
The government previously rolled out a series of tightening measures, but property prices remain high since 2009 in the wake of the global financial crisis as large amounts of speculative capital stayed in the property market.
