WORLD PROPERTY CHANNEL ®

Think buying a first or second home in the U.S. is a challenge these days?  It's a piece of cake compared to what a buyer might encounter in China these days.

Worried about runaway property prices and a bursting real estate bubble, China's State Council has taken these steps to slow the home-buying binge:

• Banks may now refuse additional mortgages to home buyers who already own two or more properties.
• Local governments may limit the number of property purchases each investor makes within a certain period.
• Banks may raise minimum down-payment levels and mortgage rates for certain home buyers.
• Encouraged local governments and banks to even more strictly control credit for speculative property transactions.
• Advised banks to  "greatly increase" minimum down payments and mortgage rates for those buying third or fourth homes, if a mortgage is to be issued at all.
• Told banks to stop issuing mortgages to non-residents who haven't paid local taxes or welfare-benefit fees for more than a year.
• Urged banks to raise the minimum down payment for second-home purchases to 50% from 40%, while requiring mortgage rates to be no less than 1.1 times benchmark rates.
• Set a 30% minimum down payment for purchases of first homes that are larger than 90 square meters.

The new mortgage guidelines came after data from the Chinese central government showed property prices in 70 of China's large and medium-sized cities rose 11.7% in March from a year earlier, the fastest pace since China began releasing the data in July 2005, the Wall Street Journal reports.

"Overly high housing prices and overly fast price growth has increased the difficulty for people to seek residence through markets," the State Council said in its published notice. "It also increased financial risks, which aren't beneficial to balanced social development."

The State Council added, "Each region's governmental departments should fully realize the threat of overly fast property-price growth and seriously implement the central government's real-estate-market policy adjustments."

The government also reiterated that local governments should increase land supply for residential housing development and expedite construction of government-subsidized housing.

The State Council also said the government will strictly monitor land purchases and fund raising of developers to prevent speculation on land prices, according to the WSJ.

Local governments need to file reports to the central government on audits of local developers by the end of June, the State Council said.  

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