Oct. 11 (Bloomberg) -- China’s southern city of Foshan will allow residents to buy a second home, becoming the first city to relax government policies to rein in property prices.
Foshan, in Guangdong province, will allow local families to buy one more residential property priced at less than 7,500 yuan per square meter from tomorrow, the city government said in a statement on its website today. More than 40 cities, including Foshan, this year limited the number of homes that each family can buy.
“This first loosening by a city government shows local governments are reluctant to strictly implement the central government’s policies because of a lack of money and as economic growth is slowing down,” said Peter Bai, a Beijing- based property analyst for China International Capital Corp., the country’s biggest investment bank.
Property construction last year drove more than half of economic growth, while land sales contributed 40 percent of revenue earned by local authorities that have amassed 10.7 trillion yuan ($1.67 trillion) of debt. China this year introduced more policies to cool the property market including raising mortgage down-payment requirements and imposing home purchase restrictions.
More cities may follow Foshan, said Wee Liat Lee, a Hong Kong-based property analyst at Samsung Securities Co.
China’s home prices fell for the first time in a year last month, according to SouFun Holdings Ltd., the country’s biggest real estate website.
--Editors: Andreea Papuc, Linus Chua
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