Government to punish property price manipulation

09:13, April 21, 2010      

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New regulation designed to cool the surging real estate market

China's top housing authority has pledged to punish property developers who deliberately raise housing prices by delaying proposed sales dates - the latest move by the government to cool the red-hot real estate market.

The rule was issued by the Ministry of Housing and Urban-Rural Development on Monday.

In the regulation, the ministry also ordered developers not to take deposits for sales of uncompleted apartments without proper approval and barred them from charging "abnormally high" prices.

Developers must disclose to the public all apartments available and their prices, and start selling within 10 days after getting pre-sale approval, the Ministry said in a statement on Tuesday, vowing to punish developers that "artificially" create supply shortages.

The focus on developers' sales tactics follows curbs on loans for third-home purchases, increased down payment requirements and higher mortgage rates announced in the past week.

The State Council, or the Cabinet, has said stricter measures to control speculation are needed after property prices in 70 cities jumped a record 11.7 percent in March.

"It will have some impact curbing prices if implemented effectively," said Li Shaoming, a Beijing-based analyst at China Jianyin Investment Securities Co. "Tax policies may follow if those measure fail to produce evident effects."

Developers who fail to start selling within the required time, price homes at "abnormally high" levels, or "artificially" create supply shortages by faking sale contracts, will be "severely" punished, according to the statement.

The government has repeatedly said developers can't hoard land or intentionally delay sales to speculate on further price gains.

Agents are banned from practices including spreading false information and hyping sales by hiring people to pretend to be buyers, the statement said. Such practices "pushed the waves" in the rapid property price gains, Li said.

Developers tend to control the pace of supply and reserve some apartments, possibly in better locations, to sell at higher prices later, she added.

Local regulators must grant pre-sale approval to one entire building rather than some units or floors, according to Tuesday's statement. Buyers' names can't be changed after the subscriptions, the statement said.

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