HONG KONG -- Even as Chinese authorities desperately try to cool down an overheated housing market, their efforts are unlikely to halt the rise of speculators greased by low borrowing costs.
The city of Beijing abruptly toughened rules governing home purchases late Friday, catching home hunters off-guard. "I was looking for a new apartment for my grandson," a 60-something resident said with a troubled expression. Purchasers will now have to put up a 35% minimum down payment for their first home -- up from 30% -- and no less than 50% for their second home.
The autumn months known as "Golden September and Silver October" are the busiest time in the Chinese real estate industry. Beijing's move in the middle of the peak season appears to have achieved the intended result to a degree. Some home hunters vented on a housing-related website, expressing disappointment and a determination to keep looking -- but somewhere outside Beijing.
Biggest bubble in history
After tanking in 2014, the housing market rebounded in 2015 and went into overdrive this year. Home prices in 100 major Chinese cities have risen on the month for 17 consecutive months through September, the China Index Academy reported Saturday. The private-sector think tank also says that September's prices jumped 16.64% on the year, outpacing the 13.75% gain recorded for August.
The fever has even spread from so-called tier 1 cities like Beijing and Shanghai to outlying areas in recent months. In Shenzhen, China's costliest real estate market, prices soared more than 40% on the year in September. Prices also appreciated markedly in such lower-tier cities as Dongguan, Nanjing and Wuxi. The mainland's housing market is experiencing "the biggest bubble in history," said Wang Jianlin, chairman of property developer Dalian Wanda Group, in a recent interview with an American news outlet.
Local governments in outlying areas have also started rolling out measures to stem the tide. On Sunday, Wuxi increased the 30% minimum down payment on second homes to 40%. Hefei, a city in Anhui Province, instituted measures the same day permitting only up to two home purchases.
Nonresidents of Tianjin are temporarily restricted to buying just one property within the city's downtown area under new rules put in place Friday. The day before, Guangdong Province issued orders for property sellers not to hint at future price gains or use certain words in advertising suggesting wealth through real estate.
But the measures "will only work for the short term, because their effectiveness in holding down the Chinese housing bubble is wearing off," said Shen Jianguang of Mizuho Securities Asia. The new rules target mainly first-time homebuyers. To rein in prices for the long term, the authorities "would need to implement property tax reforms that also affect those who've already purchased [homes], and they would also need to increase the supply of housing lots," Shen said.
Meanwhile, stepped-up efforts by the government to cool down the housing market are impacting the stock market. Such major real estate developers as state-owned China Resources Land and China Overseas Land & Investment logged year-to-date highs in Hong Kong on Sept. 9. But these shares have since been sluggish on concerns that the authorities will tighten control over home sales. Major Chinese property developers lost more than 2% across the board in morning trading Monday in Hong Kong.