From Chinese Press

Real estate needs stricter laws

(China Daily)
Updated: 2010-07-21 07:53

The government has told banks not to grant loans to people buying a third house. But the move to prevent speculators from further heating up the housing market is not likely to stop banks from doing so, says an article in Beijing News. Excerpts:

According to government rules, banks cannot give loans to people buying a third house. But banks may not turn down applications from such people indiscriminately because speculators can get around the rule by not mentioning that the loan is to buy a third house.

Different local administrations and banks have different methods of identifying whether a person is buying a third house. Some of these methods may not be foolproof. Moreover, only a few cities like Beijing have implemented the government order strictly. To solve the problem, the government should set a limit on the total amount of loan a person can borrow from banks. It should also impose restrictions on the total amount a bank can grant as housing loan in a year. Unless the government does this, housing prices will keep on rising.

(China Daily 07/21/2010 page9)