Shanghai has introduced new rules to try and slow down property speculation and avoid asset bubbles.
Home buyers must prove they are first-time purchasers before they can benefit from a reduced 1% deed tax levied on property transactions. The Ministry of Finance cut the rate to 1% for first-time buyers of homes smaller than 90 square meters in November last year.
People buying second homes must show their existing living space is smaller than the city’s average to qualify for a minimum 20% down payment and a 30% discount on mortgage interest rates.
This is part of a wider effort throughout China. Premier Wen Jiabao has pledged to tackle “excessive” property-price gains in some cities, using tools including taxes, loan rates and the construction of more low-cost housing.
China Post reports that prices across 70 cities rose at the fastest pace in 16 months in November, fueling concern that record lending and inflows of capital from abroad may create asset bubbles.