INVESTORS are turning their sights on second-tier cities as government curbs take effect in the red-hot property market.
The trend can be attributed to the municipal government s greater restrictions on home purchases released in early October. Under these rules, families with residency status are now limited to owning two homes, while those without residency can buy one if they can show they have paid taxes or social insurance in the city for at least a year.
One week after their introduction, the curbs have effectively brought property deals down by 40 to 60 percent.
Property experts expect housing prices to drop to an average of 17,800 yuan per square meter after the latest restrictions, launched yesterday, which prohibit banks from offering a 30 percent discount on first mortgage interest rates.
Discounts have been capped at 15 percent.
Under the new policy, buyers will have to pay 555 yuan more per month for a 30-year 1-million-yuan mortgage with a benchmark interest rate of 6.14 percent.
The period before and after the National Day holiday in early October is usually a peak time for housing sales, but many real estate agencies have reported that they are having to rely on rentals and commercial property sales.
Seeing the municipal government s determined stance, a number of speculators in the city have shifted their attention to Huizhou, just as those from Beijing, Shanghai and Guangzhou try to seek light in second-tier cities although exact numbers are not immediately available. According to a report by the Chinese-language Guangzhou Daily on Sunday, both housing sales and prices are stable in second-tier cities in the Pearl River Delta area.
Earlier newspaper reports also said that 60-70 percent of luxury house buyers in Huizhou are from Shenzhen. Unlike the first-tier cities, most second-tier cities, such as Foshan, Huizhou and Zhongshan, have not launched home purchase limits.
Shenzhen remained determined to curb unreasonable home purchase demand and strictly limit speculation in the property market, on a slight rebound before October.
In September, prices in 70 domestic cities climbed 0.5 percent from August and the value of property sales soared 56 percent, according to official data. Prices rebounded for the first time since May on a monthly basis after staying unchanged in the previous two months and declining in June.
The data added to challenges faced by policymakers who this year tightened down-payment requirements, suspended loans for third-home purchases and pledged to speed trials of a property tax that may be rolled out nationwide. (Jane Lai)
