Measures taken to curb soaring housing prices
(AP)
Updated: 2006-05-29 21:10
China's Cabinet took aggressive steps Monday to cool off one of the hottest
parts in the red-hot economy, ordering measures to restrain soaring housing
prices and discourage real estate speculation.
The new measures by the State Council included tighter lending standards and
higher minimum down payments. They came only a week after banks were told to
favor families buying their first homes and to cut back on lending to investors
in expensive luxury villas and apartments.
The latest steps were taken to "promote the healthy development of the real
estate market," the State Council said in an announcement carried by the Xinhua
News Agency.
China's leadership has periodically tried to rein in the economy, which has
galloped along at about 10 percent growth for each of the past three years. In
April, the government called for renewed efforts as investment in housing,
factories and other fixed assets rose, prompting fears that banks were lending
carelessly and could end up with bad debts.
Housing prices have been a particular
concern because their rapid climb is likely to widen a
huge gulf between China's rich and poor.
The government says housing prices rose by an average of 5.5 percent in the
first three months of this year, compared with the same period last year. But in
areas increases are much greater.
Under the latest measures, developers are required to charge down payments of
at least 30 percent, up from the previous minimum of 20 percent, according to
the announcement. It said low-income families can still qualify for the 20
percent level for properties smaller than 90 square meters (970 square feet).
In addition, developers will now be required to supply a minimum of 35
percent of the capital for new properties, the announcement said, without giving
the earlier level.
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