Shanghai, March 25

Shanghai today unveiled rules to cool its housing market, as China seeks to rein-in property speculation in select top-tier cities where prices have raced out of control in recent months.

The regulations require down payments of at least 70 per cent for larger and more expensive housing, and ban developers and real estate agencies lending buyers the money for such payments, according to a Shanghai government statement.

“The new rules in Shanghai are quite strict,” Deng Haozhi, chief analyst at property developer Fineland, told AFP. “It’s a comprehensive policy, which will certainly push down the investment atmosphere.”

The moves by Shanghai, China’s commercial hub and one of the country’s most vibrant property markets, are a departure from most of the rest of the country, where local governments are trying to boost real estate prices after two years in the doldrums.

Home prices have surged in China’s first-tier cities after the government moved to stimulate the flagging property market to help boost the slowing economy.

Shanghai’s new home prices jumped 20.6 per cent year-on-year in February, according to figures from the central government’s National Bureau of Statistics. It lagged only behind the southern city of Shenzhen, which saw a whopping 56.9 per cent year-on-year jump for the month.

A survey by the China Index Academy showed that the average price of a new home in the country’s 100 major cities rose 0.60 per cent month-on-month in February to 11,092 yuan ($1,695) per square metre.

Shenzhen, Beijing and the southern city of Guangzhou have started to crack down on financing sources for down payments, state media reported earlier this month.

Premier Li Keqiang on Thursday pledged to prevent big fluctuations in the property market and promote its ‘stable and healthy development’.