China to limit home loans for foreign buyers

China will limit mortgages for home purchases by foreigners to curb overseas investment, as part of its continued efforts to lower property prices.

According to the National Development and Reform Commission, China’s planning agency will not approve medium- and long-term foreign debt quotas for overseas banks this year, if they intend to use such borrowings to fund home loans taken out by foreigners.

“This is actually only going to have a perceivable impact on the mid-to-high end of the market,” said James MacDonald, Head of China Research for Savills Property Services (Shanghai) Co.

“Foreign buyers only make up a tiny proportion of the overall China market and are not very active in the ultra high-end or mass market.”

He noted that foreigners only make up one million of China’s population of 1.3 billion, and not all of them purchase properties.

Chinese Premier Wen Jiabao has reiterated that the central government will maintain property measures to bring prices down to a reasonable level. Last year, the country increased mortgage rates and down payment requirements on some homes while implementing home purchase restrictions in 40 cities.

Source : PropertyGuru – 6 Feb 2012