Economy

China limits housing purchases by foreigners

(Xinhua)
Updated: 2010-11-15 21:33

BEIJING - China's Ministry of Housing and Urban Rural Development announced Monday that purchases of housing by overseas organizations and individuals in the country would be capped or restricted, a move widely seen as combating speculative money from overseas that might flow into the property market.

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The ministry has also joined with the State Administration of Foreign Exchange in issuing a circular calling for standardizing the management over purchases of housing by overseas organizations and individuals.

Under the new rules, foreigners would only be eligible to purchase one flat for their own use, and they are required to provide proof of having worked in the country for at least one year prior to the purchase. Foreigners would also need to provide a written statement proving they have no other homes in the country when making home purchases.

Also, individuals from China's Hong Kong, Macao, and Taiwan would need to provide documents proving they are working, studying or residing on the mainland when they make home purchases.

Regulations announced by the Chinese government in 2006 did not specify the number of home purchases allowed by overseas individuals.

Further, the new rules also require that foreign organizations in the country may only purchase non-residential housing in the cities of their registration to be used as offices, rather than as residential homes. This contrasts with previous regulations, which did not ban foreign institutions from buying residential homes for private use.

China's foreign exchange regulator has repeatedly warned of "hot money" inflows into the country amid heightened fears of asset bubbles and increasing pressure from inflation, which rose to a 25-month high of 4.4 percent in October.

The recent "quantitative easing" monetary policy by the United States has also added to the concerns of hot money inflows into emerging economies with higher interest rates.