China tries to curb house-buying

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China introduced a range of new measures to try to rein in its property market yesterday, as the country battles to avoid a speculative bubble that analysts fear could derail the economy.

The Government is also pushing forward reforms of property-related tax and reinforcing measures to prevent property developers from hoarding land as it attempts to curb speculation without causing a bust in a sector that accounts for a quarter of investment and 10 per cent of total output in the country.

Under the latest rules, banks must suspend mortgage loans to third-home buyers, while all first-home buyers will need deposits of at least 30 per cent. The fresh measures are aimed at "consolidating the achievement in curbing the property market and promoting its healthy development," the official news agency Xinhua said.

Growth appears to have cooled slightly since April when Beijing announced a rise in down payments on second homes to 50 per cent and told banks to charge a minimum mortgage rate on second homes of 1.1 times the benchmark interest rate.

House prices in major cities rose 9.3 per cent year on year in August, after hitting 12.8 per cent in April. But the value of sales and space sold both fell.