China steps up efforts to curb property prices

BEIJING: China has moved to further curb real estate speculation by telling banks they will be allowed to refuse additional mortgages to buyers who own two or more properties.

The move comes soon after the government last week raised the minimum down payment for second home purchases as authorities try to rein in the market with the economy growing at a blistering pace.

Under the new rules, announced at the weekend, banks can also refuse loans to people who cannot prove they have lived and paid taxes for at least one year in the city where they intend to buy, the State Council, or cabinet, said.

Last week the State Council raised the minimum down payment for second home purchases to 50 per cent and set a minimum 30 per cent deposit on first homes bigger than 90 square metres (970 square feet).

The latest moves highlight growing concern in China that the property market is overheating, after prices in major cities rose 11.7 per cent year-on-year last month, the fastest since the survey was widened to 70 cities in July 2005.

The State Council also renewed a pledge last week to rein in runaway prices by increasing the supply of land for construction, accelerating the building of affordable housing and cracking down on speculative activity.

China is trying various ways to prevent the growth of asset bubbles as the nation's economy surges — it grew 11.9 per cent in the further three months of the year — and keep a lid on inflation.