Beijing home sales remain at record levels despite toughened home-buying rules being imposed on the city. 1,491 primary residential units were sold from March 6 to 12, representing 24% growth on the same period last month, according to Centaline Property. Average new home prices in the city also climbed 6.85% to CNY42,970 per square meter. “In anticipation of further price growth, home-buyers have been rushing to the market since the end of last year,” said Guo Yi, Marketing Manager at Yahao Real Estate, a Beijing-based property consultancy. “Market liquidity is abundant, institutions and individuals still have easy access to low cost capital,” she said. The second hand market is even more frenzied, say experts. The Beijing authorities have been implementing the strictest home-buying regulations in the country, including a 35% down payment requirement for first-home buyers and a 50% threshold for those who already own an apartment in the city. Non-locals must have worked in the capital for at least five consecutive years even to be eligible to buy a flat. The city has also set further price caps on some newly launched projects, shortened the mortgage duration of second-home borrowers from 30 years to 20 years, and reduced discounts on mortgage rates for first-time buyers. But Guo conceded the situation will be hard to improve as long as the serious shortage in supply continues. “Only 420,000 square meters of new land for commodity apartment development was released last year in Beijing, compared with an 8,000,000 sq m annual demand,” Guo said. Also in other first- and second-tier cities sales have been brisk in the past few weeks, because there is still a big demand. Most developers are unwilling to cut home prices because land prices remain elevated and developers’ cash flow is healthy due to strong sales last year, Morgan Stanley analysts said, as reported by the South China Morning Post.

In the latest development, the Beijing municipal government has taken new measures to discourage home buying, including raising down payments for most property deals for second home purchases to an unprecedented 80%. Down payments for second-time “ordinary home” buyers was raised to a minimum 60%, from 50% before, while second-time “non-ordinary home” buyers will have to pay a minimum of 80%, up from 70%. The capital’s authorities introduced the distinction between an “ordinary” and “non-ordinary” home on September 30. Homes larger than 144 square meters, or with a price 20% higher than government-set guidelines, are defined as “non-ordinary”. In Dongcheng and Xicheng districts in Beijing, the average asking price for flats has reached about CNY120,000 per sq m, according to Homelink.