Cabinet to banks: No loans to buyers of three or more houses

In another bid to combat soaring property prices, China's cabinet Saturday detailed further measures to prevent speculative buying of property, empowering commercial banks to refuse mortgages to people owning two houses already and looking to purchase more.

Following last week's increased down payment requirements and hiked interest rates for second home buyers, the State Council issued a statement on the central govern-ment's website asking commercial banks to stop granting loans to third house buyers and speculators.

The statement said loans will not be granted to non-local residents who don't pay taxes. Most house buyers in major cities like Beijing are wealthy individuals residing in other parts of the country.

About 50 percent of Beijing house buyers are speculators from other places, said Tian Baoqiang, a salesman in an outlet of 5i5j, a real estate broker.

"The measure will be effective in kicking out investors or speculators who borrow money from banks to further boost market prices for short-term gains," said Hui Jianqiang, a senior analyst with the E-House R&D Institute.

However, the effect of the new measures will be limited in driving off rich people who can make full payment on houses without borrowing from banks, Hui said.

Hui expects the market will stabilize instead of dashing upward irrationally after the central government recently launched a series of measures issued to bring property prices under control.

Following the new measures, "50 percent of the speculators will start dumping their stocks, and it's most likely that the housing price in Beijing will decline by 20 to 30 percent by the end of the year," house. focus.cn reported Sunday, citing Centaline Group's forecast.

Most likely to drop are prices in Beijing's suburbs, such as Tongzhou, Southeast Yizhuang, and Southwest Fangshan District.

The price of many buildings in East Tongzhou district dropped by 3,000 yuan ($439.24) almost the same day the new measures were announced, house.focus.cn reported Sunday.

Previously, the area had seen some of the fastest-growing prices this year.

Compared with the suburbs of Beijing, property prices in downtown areas like the central business district will likely not drop much, said Tian of 5i5j.

"People have a large amount of cash. Where do you think the money will go?" Tian said.

He said that for some high net-worth individuals, a lack of investment channels as lucrative as the housing market will still make housing a draw.

The average housing price in Beijing reached 25,010 yuan ($3661) per square meter April 5, up 128.46 percent year-on-year, the Beijing News reported April 7, citing the Yaohao Agency's data.

Apart from the cut of financial support for housing intended for anything other than living purposes, the Ministry of Finance is also mulling a tax of 20-50 percent on the gains from buying and selling second homes, the Xinhua News Agency reported Sunday, citing an unidentified official.

Source: Global Times