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touchring
4th October 2007, 06:30 AM
Maybe the next round will be a 60% downpayment requirement - you can only borrow 40%. WTF??


China strikes again to cool sizzling property market

6 days ago

SHANGHAI (AFP) — China has announced another package of measures to cool the country's red-hot property market, including raising the the downpayment requirement for second homes to 40 percent.

"Domestic property prices are rising quite fast and there are obviously irrational factors behind this," the central bank and the China Banking Regulatory Commission said in a joint statement released late Thursday.

The statement said commercial banks were facing "significantly higher risks" and if property prices became too volatile, a surge in bad loans was likely to follow.

As part of the new measures, which take effect immediately, the downpayment requirement for people buying a second home was raised to 40 percent from 30 percent.

The downpayment required for commercial properties such as offices was also raised to 50 percent from 40 percent.

Further, mortgage rates for second homes and commercial properties must now be at least 1.1 times the benchmark lending rate, the statement said. Previously the minimum was equal to the benchmark rate.

The statement said banks were banned from providing loans to developers that had been found hoarding land or houses, and that real estate vacant for more than three years must not be accepted as collateral for bank loans.

China has since 2005 taken many steps, including interest rate hikes and imposing taxes, to curb rapidly rising real estate prices amid concerns of a dangerous bubble in the sector.

Interest rates have been hiked five times this year alone, most recently on September 15, with apparent little effect.

Property prices in 70 major cities across the country rose 8.2 percent in August from a year earlier, the fastest so far this year, according to official data.

Property prices in Beijing were up 12.1 percent in August year-on-year and 20.8 percent in southern Shenzhen, a booming city just across the border from Hong Kong.

Rubber Duck
4th October 2007, 06:37 AM
Sounds open to abuse.

I bet in many cases the "Deposit" it is funded by other borrowing possibly from the same finance house. If not now then it is bound to happen. Market forces generally prevail.

Just hope they don't squander all those saving by lending it to those no-hopers across the lake.

touchring
4th October 2007, 06:41 AM
Sounds open to abuse.

I bet in many cases the "Deposit" it is funded by other borrowing possibly from the same finance house. If not now then it is bound to happen. Market forces generally prevail.

Just hope they don't squander all those saving by lending it to those no-hopers across the lake.



http://online.wsj.com/article/SB119143493674747868.html?mod=googlenews_wsj

China's Large Developers
Poised for Long-Term Run
By JONATHAN CHENG
October 4, 2007

Sector analysts like Raymond Ngai of J.P. Morgan say the latest round of government tightening is likely to be ineffectual. Raising the down payment on second homes to 40% from 30% is hardly going to make a difference, for instance, when speculators are already skipping the home loan altogether and snapping up apartments with 100% cash. Developers say roughly 40% of their sales are paid for in hard cash, Mr. Ngai says, citing conversations with the property companies.

touchring
6th October 2007, 10:40 AM
In the event of meltdown, the Chinese have ways of handling it, moving back to the parents home, sharing with another family, etc, etc.