The latest measures announced by Beijing to cool property markets will effect mainly a handful of cities in eastern China where real estate bubbles are most rampant. Anyone buying a second home now needs to put up a 50% deposit, up from 40%, while the mortgage rate for second homes has also been increased. The minimum down payment for first homes bigger than 90 square meters has been set at 30%. Banks are also being guided not to make loans for third homes and to require a year’s local residence for any home loan. They have already been told not to make loans for property speculation.
The constant flow of regulatory measures to starve property speculators of credit is having some effect, if more slowly than the authorities would like. New bank lending totaled 510.7 billion yuan ($75 billion) in March, down from 700.1 billion yuan in February, according to the central bank. But that still leaves total new loans for the first quarter at 2.6 trillion yuan, above the government’s target of 2.25 trillion yuan, and 30% of the 7.5 trillion yuan target for the year as a whole. That suggests more measures will be forthcoming as the government seeks to avoid a generalized increase in interest rates while it believes the resurgence of growth is still fragile and stimulus-spending fueled.