China has introduced new rules which include the first nationwide minimum down payment on land purchases from the government, and follow a vow from Beijing to curb what it calls an "overly fast" rise in property prices by boosting the supply of cheap public housing and redeveloping slum areas.
The new rules include a minimum down payment of 50% on land purchases from the government. Local-level governments previously asked developers to put down 20%-30% of the value of the land in such deals.
The new policy also requires developers to completely pay off land purchases from the government within one year of a sale agreement, with a one-year extension allowed for certain "special projects."
The new rules also require local governments to fully reflect the proceeds of land sales in their budgets and forbid them from giving discounts to developers or allowing developers to delay payments.
Matthew Fang, an analyst at Guosen Securities, said the down-payment requirement could discourage property developers from further bidding up already-record-high land prices at auctions in more affluent coastal cities.
Wall Street Journal reported China Vanke said the new regulations will benefit "properly managed" developers as they will weed out unreasonably high bids from smaller developers and stabilize the land market.