The resurgence in the property prices in Shenzhen and Shanghai has forced authorities to rethink property market activities. The Chinese government has run a detailed analysis on market scenarios and they have finally come to a conclusion.
The officials at Shanghai recently revealed new policies to cool down the real estate market and it also includes a measure to capture the loopholes in fake divorce filing which makes people eligible to buy new properties. Furthermore, the government has also decided to levy a tax on all the houses that are purchased within the past five years. It is expected to be up from the tax barrier applied two years ago.
With this new policy on the ground, the professionals in big cities of Shanghai such as Hangzhou and Shenzhen are expected to crack down all the housing speculations due to fake divorces right from the year 2018.
It is important to mention that most of the Chinese cities follow certain limit on home buying trends on the basis of how many properties a single family can own. But divorce has become a way to bypass this restriction. As per existing guidelines, one family in Shanghai can own two homes at maximum. As per the new rules, the number of homes that are owned by divorced couples within the last three years will be counted and this count will be compared with the number of homes they used to own when they were married.
Other than this, the government authorities at southern boomtown have also decided to tighten the rules for a home purchase by this month. With the new rules, the cost of an apartment has to be equal the 43.5 times higher than the annual salary of the resident. Note that the housing affordability is generally better in Shenzhen as compared to Hong Kong, which is believed to be worse in respect to other 80 megacities.
With the rising purchase of houses going on in the big cities, the authorities have now decided to control the measures. The central bank has recently capped the loans for investments in the real estate sector by the beginning of this month. The government authorities are now ready to take solid actions towards the management of the real estate market in the residential sector.
As per the China Real Estate Information Corporation, the prices for the existing homes at famous residential projects of Shanghai have surged by more than 30% as compared to the last year. Furthermore, the sales activities for the existing homes have doubled depending upon the sq m volume. Therefore, it is important for authorities to take relevant actions in this direction to control ongoing activities in the real estate market.
It is expected that the implementation of new rules in Shanghai will tighten the home buying requirements in the city. Earlier in the year 2016, it increased the threshold for down payments by 70% for the residential properties to cool down the real estate demands.
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