China restricts pre-sales to curb property prices

BEIJING: China on Tuesday tightened rules on advance sales of new property developments, in the third move of its kind in less than a week aimed at curbing rampant real estate speculation.

The Ministry of Housing and Urban-Rural Development said in a notice on its website that developers cannot receive down payments for unfinished properties without first obtaining government approval.

Once the government gives developers the green light to pre-sell properties, they must publish the prices of each unit in the development within 10 days of receiving approval, the ministry said.

The ministry said it was watching the real-estate market more closely after discovering some developers were hoarding properties to drive up prices illegally.

Developers who violate the rules or conduct advance sales in a way to create false impressions that supply is lower than reality will be punished.

China on Monday told banks they could refuse additional mortgages to buyers who own two or more properties, after it last week raised the minimum down payment for second-home purchases.

The measures caused Chinese stock markets to fall 4.79 per cent on Monday as investors sold off shares in property developers, dealers said.

China is trying various ways to prevent the growth of asset bubbles and keep a lid on inflation as the nation's economy surges.

That has included a range of new measures to clamp down on bank lending blamed for fuelling speculative investment in the property sector.