New rules to restrict foreigners' ownership of homes

People from overseas hoping to buy a home in China will no longer be granted medium- or long-term mortgages, the National Development and Reform Commission (NDRC) said on Thursday.

The new policy is the government's latest measure to cool the country's property market and demonstrate its determination to allow home prices to return to a reasonable level, industry analysts said.

"When evaluating the foreign-exchange quota for medium- and long-term debt (loans with a maturity period of more than one year), we mainly examine the loans for fixed-asset investment. Those medium- and long-term loans given to foreigners for the purposes of home purchases will not be arranged," the NDRC statement said.

"The new restrictions are still aimed at the real estate market. However, as home purchase by foreigners only accounts for a small portion of the overall residential market, the impact should be limited," said John Wong, director of investment services at the real estate consultancy, Colliers International (Beijing).

At a meeting on Tuesday, Premier Wen Jiabao reiterated that regulators would "continue to strictly enforce" measures to discourage speculation, despite signs that the overheated market has been cooling.

Statistics from Centaline Property Agency show that in 2009 the proportion of homes in Beijing's pre-owned property market owned by people from overseas stood at 0.79 percent, while in deals for apartments valued at more than 3 million yuan ($476,000), the figure was more than 10 percent. In 2007 the figure was 0.4 percent, and in 2008, 0.32 percent.

In July 2006, China launched a policy restricting property purchases by foreigners. According to that policy, only expatriates who have studied or lived in China for more than one year could buy property, with purchases capped at one apartment for self-use.

"The new restriction will affect sales of some of our high-end projects," said Grant Ji, director of the investment department at the real estate service provider Savills Property Services (Beijing).

"One of the major barriers is the currency. People who don't work in China are only allowed to exchange a maximum of $50,000, which is not even enough to meet the down payment. If medium-to-long-term loans are prohibited, it will be almost impossible for them to purchase a home," Ji said.

Questions:

1. Who is facing restrictions on home purchases in China?

2. What is the new policy?

3. What percentage of homes are owned by people overseas?

Answers:

1. People from overseas.

2. They will no longer be granted medium- or long-term mortgages.

3. In 2009, 0.79 percent.