Shanghai rolled out tightening measures last night in its bid to cool the city's overheated housing market.
From today, buyers of first homes will have to pay a minimum 35 percent down payment, compared with 30 percent previously. Moreover, the term "first-time home buyers" now only refers to those who do not own any home in the city and have never applied for any mortgage loans from either commercial banks or public housing funds anywhere in the country.
Those who have owned a house in the city or currently have no house but have applied for mortgage loans from either commercial banks or public housing funds will be considered as second-home buyers.
Previously, anyone who did not own a home was considered a first-time buyer no matter whether they had applied for mortgage loans or not. Second-home buyers have to pay a minimum 70 percent down payment if the property is defined as a "non-normal" home, and a minimum 50 percent if the house is "normal," something unchanged from before.
Normal homes within the Inner Ring Road are defined as those no larger than 140 square meters and costing less than 4.5 million yuan (9,600). Between the Inner and Outer Ring roads, normal houses are those costing under 3.1 million yuan and beyond the Outer Ring Road, below 2.3 million yuan. All other homes are deemed "non-normal."
For applicants of public housing funds, which provide better interest rates than commercial banks, buyers of second homes for upgrading purposes will have to pay a minimum 70 percent down payment if the property is defined as a "non-normal" home, and a minimum 50 percent deposit if the home is "normal."
Mortgage rates for second "normal" homes will be raised by 10 percent above the standard rate. In addition, the mortgage ceiling for individual applicants of second "normal" homes will be reduced by 100,000 yuan from now, while no mortgage loans should be provided for families who have already received loans from public housing funds twice in the past.
"This batch of further austerity measures seemed not too surprising to me as housing prices in Shanghai still remained at high levels despite a recent contraction in transaction volume following policies introduced right after the weeklong National Day holiday," said Lu Wenxi, senior manager of research at Shanghai Centaline Property Consultants Co.
New home prices in Shanghai, excluding government-funded affordable housing, rose 0.5 percent last month from September, according to the National Bureau of Statistic. On a year-on-year basis, however, they jumped 37.4 percent, the bureau's data showed.
The latest change in the definition of a first-time or second-time buyer will especially affect buyers who seek to upgrade their homes.
Currently, about 90 percent of home buyers who buy houses within the Middle Ring Road are upgrading, while 60 percent of buyers buying properties within the Outer Ring Road are upgrading, according to Centaline data.
Previously, a large proportion of people seeking to upgrade would choose to sell their homes first in order to qualify as first-time buyers but under the new policies, many of them will be considered second-time buyers, Lu said.