BEIJING - The State Council raised the minimum down payment for second-home buyers to 60 percent from the curren。t 50 percent on Wedne。s。day, and called on loc。al governm。ents to set price targets in the latest move to rein i。n property prices.
The new me。asures are expected to further cool specul。ation in the housing m。arket after property prices in 70 major cities poste。d their。 fourth straight month-on-month ris。e.
The mortgage rates for second-home buyers, however, remain。 unchanged at 1.1 times the benchmark lending rate, acco。rdin。g to a statement posted on www.gov.cn.
"The 10。 percent inc。rease in dow。n payment wi。ll have a big impact on th。e middle- and high-end housing market," said。 Carlby Xie, head of research a。nd consulting for North Ch。ina at Collier。s International, a real estate agency.
Th。e price for a two-bedr。oom apartment in Beijing along the Fourth Ring Road now stands at close to 3 million yuan ($450,000). A 10 percent increase in down payment means the buyer has to pay 300,000 yuan more.
The average annual income of a civil servant。 is around 100,000 yuan.
Local gover。nments must set property。 price targets in line with local income l。eve。ls for 2011 and the targets should be made pub。lic in the first quarte。r, the State Council said.
Those who fail t。o meet t。he targets will have to explain to the State Council, the statement。 said.
Local。 governments are also required to set a cap on the number of apartments residents can purchase.
People who already。 have an apartment ar。e allowe。d to buy another but those with two apartments will not be permitted to buy any more, according。 to the statement.
"A sou。nd。 implementation of these measures will definitely we。igh down property prices, especially in second- and third-tier cities where speculative purchases are rampant," sai。d Xie. "But for major cities such as Beiji。ng and Shanghai, the impact will be s。mall as the housing supply is limited."
Wang Gehong。, presid。ent of Beijing Grand。China Real E。state Fund, said some administrative measures, such as purchase rest。ric。tions, are temporary, and "aim to curb speculation".
They will help the government。 gain more time to boost supply, especially of af。ford。able housing, he said.
Such measures are also necessary to curtail develope。rs' windfall profits and put the industry o。n more solid foundations, he added.
Industry statistics show that the profit margi。n for developing a property proje。ct。 r。anges from 25 percent to 30 percent.
"There is no doubt that the government will furth。er tighten c。ontrol over the property market this yea。r,。 and we are going to see a big d。rop in propert。y investment and newly started housing projects。," said Ren Zhiqiang, chairman of Hua。yuan Real Estate. "We expect floor space sold in 2011 will increase 10 percent to exceed 4 billion square meters, but the。 year-on-year price growth rate will drop this ye。ar."
Property prices registered their smallest year-on-year gains in D。ecember, after peaking at 12.8 percent in April.
Despite the slowing annual growth rate, property prices in 70。 surveyed citie。s posted their fourth straight month-on-month rise, w。ith the gain in December standing at 0.3 percent, according to the National Bureau of Stat。istics.
Ch。ina sho。uld be cautious about the risk of a real estate bubble,。 World Bank Chief Economist and Senior Vice-President Justin Yifu L。in said on。 Tuesday.
"China must carefu。lly study the cases of Japan an。d Ireland,。 where the collapse of the real estate bubble caused a fi。nancial crisis and e。conomic stagnation," Lin told a symposium at Peking University.
According。 to Peng Wen。sheng, chief eco。nomist with China International C。apita。l Corp Ltd, asset bub。bles ar。e a major challenge facing China. "。A widening wealth gap is one of the major risks from ball。ooning housing prices, which will。 lea。d to social instability," said Peng.