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Thursday, September 30, 2010

China steps up control of property market

China on Wednesday announced it had taken further steps to cool its red-hot property market, ordering banks not to provide loans for third home purchases and above.

The new measures are aimed at preventing house prices from rising too fast, the State Council, or cabinet, said in a statement, amid fears of a speculative bubble that analysts say could derail the world's second largest economy.

The cabinet said down payments on all home purchases would now have to be at least 30 percent, and limited the number of homes that people can buy in cities where prices are too high, have risen too quickly or where supply is tight.

The new measures urged banks to strengthen their oversight of consumer loans, banning them from being used to buy homes.

The cabinet also called for a trial reform of the property tax now being carried out in some cities to be sped up and gradually expanded to the whole of China.

This is widely expected to entail an expansion of the tax on commercial real estate to cover residential houses.

The measures are the latest in a series issued this year -- such as tightening restrictions on advance sales of new developments -- to try and prevent the property market from overheating.

Official data has suggested that these efforts have started to pay off, with growth in China's property prices slowing for the fourth straight month in August.


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