China’s Shenzhen raises property deposit thresholds

The southern Chinese city of Shenzhen has raised deposit requirements for some home buyers, the latest in a series of measures being introduced across the country to calm property markets, according to the official Xinhua news agency.

Authorities in Nanjing, in the eastern coastal province of Jiangsu, issued similar measures on Monday, underlining how the government's tightening campaign has spread to more "second tier" cities.

China’s housing market bottomed out in the second half of 2015 after slowing for more than a year, but a strong rebound in prices in the country’s biggest cities have sparked fears of overheating and raised concerns of a property bubble.

Shenzhen has been the hottest property market in the country, with prices up nearly 57 per cent in February from a year earlier.

The Shenzhen municipal government said on Friday that first-time buyers who have taken out mortgages over the past two years and some second-time buyers must now make a 40 percent downpayment, an increase from the 30 per cent previously required, said Xinhua.

Non-local buyers must have paid three consecutive years of income tax and social security premiums, up from one year, if they wish to buy a home in the city.

Shenzhen authorities also said they had banned financial institutions including online firms and small lending firms from offering margin lending to home buyers, according to Xinhua.

Shenzhen will also increase land supply and build more government-funded houses to balance demand and supply.

The authorities in Nanjing raised the minimum downpayment requirement to 30 per cent from a previous 20-25 per cent for some second home buyers who apply for mortgages twice, according to a statement on the central bank’s website.

The central bank’s Nanjing branch also asked banks to closely scrutinise if mortgage applicants can enjoy preferential policies for first home buyers.

Authorities in Shanghai tightened mortgage downpayment requirements for second-home purchases last week.

Two weeks ago, Suzhou, also in Jiangsu province, introduced measures to cool a red-hot housing market by putting a cap of 12 per cent on annual home price gains.

Reuters