50% deposits rule follows record Chinese house price rise

The Chinese government has raised the deposit requirement to 50 per cent (from 40) on purchases of second homes, in an apparent bid to dampen enthusiasm for property speculation. First-time buyers will also need bigger deposits – a minimum of 30 per cent, up from 20 per cent – where the property covers more than 90 square metres.

Reuters also reports that banks must set mortgage rates on second homes at a minimum of 1.1 times the central bank’s benchmark rate. At the moment, banks can charge rates they deem appropriate.

The move follows new data showing that property prices rose 11.7 per cent in the year to to March, and the economy grew 11.9 per cent in the year to Q1 2010. In February, annual inflation rose steeply to 2.7 per cent, from 1.5 per cent the month before.