China's Dandong city, on North Korea border, curbs buying frenzy in property market

BEIJING: The Chinese city of Dandong, which lies on the border with North Korea, is tightening regulation of its property market after speculators pushed up home prices as they bet on Pyongyang's pledge to rebuild its economy.

Investors are flooding into the property market in Dandong, hoping to obtain early market share after the historic inter-Korea summit last month opened the prospect of a rapid improvement in relations between North Korea and the rest of the world.

According to the guidelines issued by the Dandong government, the city plans to impose purchase restrictions in a new zone next to North Korea known as a "ghost city" due to its low residency rate.

Non-local residents will not be allowed to re-sell newly built homes within two years of purchase, according to the guidelines issued on Dandong government's Wechat account.

The Dandong government will also require higher downpayment ratios of at least 50 percent for buyers applying for mortgages through the housing provident fund outside of Dandong.

The fund is a type of social insurance that allows Chinese employees to save money towards purchasing their own homes.

The government will also scrap purchase subsidies.

The appetite for property purchases in light of cooling tensions on the peninsula has also spread to South Korea, where demand for property in small towns and sparsely populated rural areas around the Demilitarized Zone (DMZ) is surging to bet on an influx of people and investment.