China will limit mortgage loans for home purchases by foreigners to stem overseas investment in itsproperty market as part of efforts to cool prices.
The nation’s planning agency won’t approve medium- and long-term foreign debt quotas for overseas banks in 2012, if they intend to use such borrowings to fund mortgages taken out by foreigners, the National Development and Reform Commission said in a statement.
Premier Wen Jiabao this week reiterated that the government will maintain curbs on the property market to bring prices down to a reasonable level. China last year increased down-payment requirements and mortgage rates on some homes and imposed housing purchase restrictions in about 40 cities.
“This is actually only going to have a perceivable impact on the mid-to-high end of the market,” James MacDonald, head of China research for Savills Property Services (Shanghai) Co., said in a phone interview. “Foreign buyers only make up a tiny proportion of the overall China market and are not very active in the ultra high-end or mass market.”
China in November 2010 ordered first-time foreign homebuyers to show proof they don’t own other properties in the country, along with proof of at least a year’s employment in China before their purchases. The foreign currency regulator said at the time it will introduce new rules on currency provisioning and tighten management of banks’ foreign-debt quotas to curb hot-money inflows that may inflate asset bubbles.Read on.