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China Further Tightens Real Estate Rules

BEIJING-Chinese authorities launch another raft of measures intended to cool a surging real estate market. This time the target is developers and banks.

By Anita Howarth | Updated on August 17, 2006

BEIJING-Chinese regulators have issued a new policy tightening bank credit in the real estate sector. Under the new regimes banks are prevented from making new loans for development projects unless developers have raised 35% of the cost of the project from their own resources.

The new policy also tightens lending to developers who are suspected of building property land banks with the purpose of artificially boosting widespread sales.

The new measures are the latest in a string of government attempts to rein in rocketing property investment. The government is increasingly concerned that commercial banks might become the scapegoats if a real estate bubble were to burst. For personal housing mortgage loans, the new policy suggests that banks will decide how much a borrower will have to put down based on their credit worthiness, instead of using a unified standard.

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