China’s top performing property market in May tightens purchase rules


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BEIJING, June 20 (Reuters) – A major city in western China tightened property purchase rules on Thursday, making it more difficult for home buyers who may be taking advantage of an aggressive policy attracting graduates to bypass existing curbs.

Beijing has repeatedly urged local governments to keep runaway prices under control, but a recent easing in credit conditions, pent-up demand for housing and an implicit government mandate to prevent a collapse have kept the market surprisingly resilient.

That’s partly because China’s provincial capitals like Xian, capital of Shaanxi province with a population of over 7 million, have managed to create a new source of demand for apartments by making it much easier for graduates to get coveted household registration permits.

The permits, known as hukou, have been used to control internal migration in China for years. Without a permit, a resident of a city may not be able to get a range of public services, including education and health care, and would sometimes have to live on the margins of society.

The Xian housing bureau said in a statement on its website that those who obtain a Xian hukou will only be allowed to buy a home in the city after at least a year.

Previously, there was no restriction on the buyer as soon as their local status was granted through the permit.

The Xian housing bureau also expanded existing curbs to include one more district, Lintong. It said the new purchase rules take effect immediately.

New home prices in China rose at their fastest pace in five months in May, with Xian becoming the top market performer among 70 major cities the government tracks. Its prices surged 2% on-month.

Since 2017, Xian has attracted over one million out-of-towners to take up the permit by aggressively easing the requirements, according to state media reports, with some analysts saying they have effectively weakened purchase restrictions the city had rolled out targeting outside speculators. (Reporting by Yawen Chen and Ryan Woo)


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