3 cities impose curbs on home purchases

Three Chinese cities have launched policies to stop companies from buying residential property, and experts predict other cities will adopt similar measures soon.

Xi'an in Shaanxi province, Changsha in Hunan province and Hangzhou in Zhejiang province halted housing purchases by companies in designated areas on June 24, 25 and 26 respectively. Other cities including Beijing have launched restrictive policies on companies previously, but this is the first time local authorities have officially put a stop to such trade.

"The large amounts of capital brought by companies and institutions are causing market panic, it has been a loophole in the country's housing policy," said Xie Yifeng, a real estate columnist and commentator.

According to a previous report on June 25 by Qianjiang Evening News, a newspaper in Zhejiang, three companies with the same legal representative in Hangzhou, a city that adopts a housing lottery system, won the lucky draw in one real estate project.

It sparked a heated discussion about fairness. Hangzhou Housing Security and Management Bureau was forced to disqualify companies and institutions from buying residential properties in areas with purchasing restrictions the next day.

"For the cities with property shortages, such policies will have a considerable effect in the market," said Zhang Dawei, chief analyst at Centaline Property. "In cities such as Shenzhen, companies buying homes are not rare, and such policies will be promoted in other cities."

"In cities with housing lottery systems, a rising number of homes are being purchased by companies," Zhang said. "Compared to individual home pur-chases, although companies need to pay more tax during transactions, they can sell the properties through equity trading without time limits."

He said companies are unlikely to get loans from banks for residential property purchases and in most cases the companies will have to pay for properties in one go.

"Property purchases by companies are mostly for speculation and occur in many cities," he said.

Yan Yuejin, research director at E-house China R&D Institute, agreed and said such policies are likely to spread in China.

Xi'an was the first Chinese city to halt residential property purchases by companies, while Changsha, the second city to implement similar measures, also announced that properties already bought by companies can only be made available for sale five years after they have been purchased.

"Changsha has a largely undervalued real estate market and the restrictive policy will help curb housing speculation," Yan added. "The previous restrictive policy targeted individual buyers, but companies were not directly affected."

renxiaojin@chinadaily.com.cn