CRI听力: New Real Estate Loan Policies Curbing Speculations

The government has recently dealt a blow to property speculators with a series of new loan policies. Its initial impact on the real estate market has prompted some developers in first-tier cities like Beijing and Shanghai to reduce property prices.

Let's take a closer look with reporter Liu Min.



The government's new loan policy specifies that secondhand home buyers pay a minimum amount of 50 percent of the property's value up front instead of the previous 40 percent.

First-time home buyers must pay a downpayment of at least 30 percent of the property price if the area of their apartment is greater than 90 square meters.

The government also forbids banks in cities with overheated real estate markets from offering loans to those who want to buy a third apartment.

Secretary-in-chief of the China Real Estate Management Union, Chen Yunfeng explains his understanding of the new policy.

"The first home can be considered a necessity of accommodation, and the second one can be considered as an improved demand. Then what's a third place for? It's nothing but an investment or speculation! Once such investment demand in the market is curbed, the sales volume will see a decline, and a turning point in property prices will occur."

Smart speculators have immediately sensed a changed atmosphere in the market. Many of them have started selling their apartments again.

A property owner from Wenzhou in Beijing has just sold 10 apartments at prices that are 10 percent below current market value.

"Why am I selling? It's so obvious that housing prices are going down! I just sold 10 apartments at one time, each for 2.2 million yuan, which I wanted to sell for 2.5 million at first."

At the same time, real estate developers have also stopped holding back properties and started putting them on the market. But many prospective home buyers are now watching the market trend without rushing to buy.

Industry insiders say if they continue their wait-and-see approach for the next two months, the price of second-hand homes will start to plunge.

Gu Yunchang, Vice President of the China Real Estate and Housing Research Committee, says the government's policy is the most stringent in history.

"The government this time is mainly using the bank's mortgage loans as a lever to curb the speculation in the market. Municipal governments can also use administrative policies at the same time by not offering loans to those who want to buy multiple properties."

The new policy also lets municipal governments add extra limits on property loans and the number of houses a person can buy within a certain period of time. For example, those who cannot provide evidence that they have paid their local taxes for at least one year, are not eligible for bank loans.

Li Wenjie, an executive member of the China Real Estate Appraisers Association, says such a policy can effectively curb real estate speculators.

"The policy will stop the loans to those non-locals. Then cities with overheated real estate markets like Beijing, Shanghai and Shenzhen will see an obvious difference."

A report issued by Beijing Centaline Property Market Research says demand for second-hand apartments had dropped by 80 percent as of April 16th. About half of the property owners surveyed said they wanted to sell their apartments as soon as possible, while 25 percent indicated they would wait it out and keep an eye on the market trend.

For CRI, I'm Liu Min.