China tightens mortgage policy for foreigners as part of cooling measures

Foreign home buyers in China will no longer be granted medium- or long-term mortgages, the National Development and Reform Commission announced last week.

The new policy is the government's latest measure to cool the country's property market, despite foreigners only accounting for a very small portion of home buyers.

Statistics from Centaline Property Agency (CPA) Ltd show that in 2009 the proportion of homes in Beijing's pre-owned property market owned by people from overseas stood at 0.79%.

The purchase of new apartments by foreign buyers had been had been on the rise, with CPA noting for apartments sales valued at more than 3 million yuan ($476,000), the figure was more than 10% during 2009.

In 2007 the figure was 0.4% and in 2008 it was 0.32%.

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 can 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) Co Ltd.

"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 told ChinaDaily website.