Nanjing is among a dozen Chinese cities struggling to cool the property market. On Tuesday, Shenzhen increased down payments and promised more land for building. Beijing has also raised down payments. (Xinhuanet file photo)
Li Chun (not her real name) from the eastern city of Nanjing believes that divorce is the best investment option for her since the city increased house-buying restrictions.
From Sept. 26, residents who already own two or more houses in certain districts will not be allowed to purchase new homes.
Li and her husband, with two houses under their names, had been looking to buy another. "New houses will increase in value more than pre-owned," she said, now only by divorcing can they buy a new home.
The National Bureau of Statistics says the price of new houses in Nanjing increased by 4.1 percent from July to August, and the August price recorded 38.8 percent year-on-year growth.
"If we buy a 100-square-meter house, the value will probably appreciate by some 700,000 yuan (105,000 U. S. dollars) over a year, which is about three to four times our yearly income," she said.
Nanjing is among a dozen Chinese cities struggling to cool the property market. On Tuesday, Shenzhen increased down payments and promised more land for building. Beijing has also raised down payments.
According to the National Bureau of Statistics, over 90 percent of bigger cities surveyed in August reported new home price rises, up from 73 percent in July and 79 percent in June.
Central bank data showed that banks in August made 529 billion yuan in household loans, mortgages accounting for 55.7 percent of that.
Lack of building plots could be another reason behind the price rises. Prices of recently auctioned land in many cities are already higher than those of nearby existing homes, meaning that home prices in these areas are set to increase.
Ni Pengfei, a researcher with the Chinese Academy of Social Sciences, believes people are now optimistic about the housing market in big cities.
Some buy for speculative reasons, and others buy now because they fear if they do not move fast they will not be able to afford it in the future, said Zhang Dawei, an analyst with Centaline Property.
Control measures can help curb speculation and stabilize the market, but only to a very limited degree unless authorities move to tighten credit while channeling more credit to the real economy, Zhang Dawei suggested.
"For bigger cities, credit should be tightened, but for others with high inventories, preferential interest rates should be offered," he said.
Housing market analyst Liu Ce believes that addressing the root of the problem means economic restructuring and developing new growth engines with higher returns than the property sector.
