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HONG KONG (Reuters) – Chinese cities at the forefront of the latest surge in housing prices are expected to tighten policies to make it tougher to buy property and head off the speculators who are partly behind the rally.
A recovery since late last year in China’s property market has provided a rare bright spot for an economy that is slowing rapidly, but some cities are showing signs of overheating.
Top-tier centers including Shanghai and Shenzhen have already tightened conditions to calm their local markets. But data on Saturday showed smaller cities were now also seeing big rises in property values.
Average new home prices in May in the eastern city of Hefei rose more than 20 percent from a year earlier. They also rose more than 20 percent in Nanjing and were up 28 percent in Xiamen, cities also in the east. The rises compared with gains nationally of 6.9 percent.
Local media in Hefei reported the local government was set to raise downpayments for buyers of second and third homes. Property agents and developers said Xiamen and Nanjing would likely follow suit with similar measures.
Property agents estimated that speculative buying accounted for half of the total transactions in some of these cities this year, up from about 20-30 percent before.
“When you start to see the market picking up and prices growing, you think if I don’t buy now I might not be able to buy later at this price,” said James Macdonald, Savills’ head of research in China.
“Certainly it creates the release of some pent up demand but there is also a bit of investment as well. Those investors who find it hard to purchase in a certain market might shift to focus...
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