Beijing bars buying of second homes

Bloomberg

The city of Beijing has banned single-person households from buying more than one residence and increased the minimum down payment for all buyers of second homes as the government seeks to cool the property market.

The city will also enforce a 20 percent tax on capital gains from property, the official Xinhua news agency said. Current rules allow each household with a Beijing residence permit to buy a second home, opening the way for couples to divorce on paper to double their ability to invest.

“This will help to calm people’s panic about home prices,” said Yi Xianrong, a Beijing-based researcher at the Chinese Academy of Social Sciences, which advises the Cabinet. “At the same time, restrictions on home purchases don’t change the fundamental demand, and it seems the new measures in Beijing are aimed more at short-term problems rather than long-term healthy development of the property market.”

Prices in the capital jumped 5.9 percent from a year earlier in February, the biggest increase since February 2011.

The city of Shanghai, where new home prices in February rose 3.4 percent from a year earlier, also issued a notice saying it will increase down payment requirements and interest rates for second-home mortgages, while prohibiting banks from providing credit to third-home buyers.