China restrains on new home purchases: report

SHANGHAI: China's eastern city of Taizhou has issued new rules to restrain new home purchases, the official China Securities Journal said on Monday, in the government's latest step to cool the red-hot property market.

Taizhou will become the first second-tier Chinese city to ban buying of multiple homes. First-tier cities, including Shanghai, Beijing and Chongqing, have already imposed similar restrictions.

According to new local regulations that will take effect on Thursday, individuals who have already have two houses in Taizhou's suburbs or one in the city proper cannot buy more homes, among other restrictions, the newspaper said.

"Analysts believe many second- and third-tier cities will announce similar restrictions on home purchases before the end of August," the newspaper said.

"As developers will be facing increasing inventory and funding pressure, property prices will more easily trend towards correction," it said.

Despite a slew of measures aimed at cooling the property market since April last year, China's annual housing inflation quickened in July for the second straight month, official data showed.

Many economists have warned that a bursting property bubble is the biggest risk facing the world's second-largest economy in the medium to long term.

Among other signs of danger, China's inflation reached a three-year high of 6.5 percent in July.

Copyright Reuters, 2011