(Yicai Global) April 23 -- China’s southernmost province of Hainan issued stringent real estate purchase restrictions yesterday to curb speculation brought by the inflow of outside funds into the province’s property market.
The Chinese government will build a free-trade pilot zone on the tropical tourist island often compared to Hawaii and has introduced a series of measures to deepen its reform and opening.
Only locals may buy houses in the cities or counties of Wuzhishan, Baoting, Qiongzhong and Baisha in the central part of the island, per the policy. The purchase restrictions also apply to other cities and areas, however, so that e.g. for a non-Hainanese household that intends to buy a home, one family member must cumulatively pay personal income tax or social insurance for a stated time in the province before so doing. The cumulative period in the main cities of Haikou, Sanya and Qionghai is 60 months, while in other regions it is 24 months.
Hainan will also slap restrictions on mortgage loans, real estate transfers, and other related businesses, requiring that a non-Hainanese pay a more than 70-percent down payment to apply for a commercial loan, and prohibit all households, companies, public institutions, and social organizations from transferring a property within five years after obtaining its deed of title.
The province’s commercial housing sales rose 82 percent annually to CNY271.3 billion (USD43.1 billion) last year, with over 80 percent of homebuyers coming from other areas, property market data released by the provincial statistics bureau show. Its balmy tropical climate is the reason most outsiders buy homes there for purposes of tourism, vacation and retirement, but speculators also abound.
The severe restrictions mainly seek to stop the new free-trade zone policy started on April 13 from further stimulating bubble growth of the island’s property market. Provincial authorities will develop beach and other water sports, horse racing and a sports lottery to create an international tourism consumption center that they fear will further supercharge the province’s real estate market.
Editor: Ben Armour