Hong Kong/China Property Daily:Inside the Great Wall

Notice on HPRs in Hefei reportedly submitted for approval.

    Hefei’s Bureau of Real Estate Management reportedly submitted a noticeyesterday for approval of home purchase restriction (HPRs). The mostimpactful points relate to the down payment ratio in the purchase of acommodity residential property: 1) the minimum down payment ratio is 25%;2) it is 40% if a household owns a residential property without a mortgagerecord or if the mortgage is fully repaid; 3) it is 50% for home upgrades withoutstanding mortgages; 4) 60% for households that own two or more flatswith fully repaid or outstanding mortgages; and 5) no HPF loans will begranted to buyers who have two or more residential mortgage records. And inthe land market, the acquirer of any land parcel at a consideration higher thanRMB2bn will have to settle the payment within a maximum period of sixmonths. (Tencent News).

    Chengdu releases new measures to control pre-sales of property units.

    On 21 June, the Chengdu government issued a notice pushing supply-sidereform in the city to support healthy growth in the property market with effectfrom 1 July. The notice said the government will adopt the dynamic monitoringof land supply and reduce supply in districts with high inventories. In districtswith an oversupply of offices, it may halt the land supply of offices and limitthe development scale of office buildings. In addition, the notice requiresdevelopers to pay deposits on land auctions. One rule raises the barrier toobtain a pre-sale permit for a new construction project. (Hexun).

    CK Property launches 123% LTV mortgage plan in the wake of SHKP.

    CK Property (0001.HK) has launched a mortgage plan with LTV as high as123% in the wake of SHKP’s (0016.HK) 120% LTV plan for Park Yoho in thesame district. This happened only one day after the HKMA and the Treasurycalled for caution in high LTV developer mortgages. CK Property’s plan issimilar to SHKP’s: it also requires homeowners to remortgage their existinghomes to CK Property to obtain a 123% LTV mortgage for the new unit. Thetenor is only three years for the plan. (Apple Daily).

    Some developers’ mortgage loan books have grown multiple times: HKMA.

    Deputy Chairman of HKMA Anthony Yuen has penned his thoughts on thetopic of developer mortgages in an HKMA’s periodical. He said citizens shouldconsider multiple factors in taking out a developer mortgage, such as 1)whether they are psychologically ready to become negative equity propertyowners, 2) whether they have adequate capital in case they are unable to getbank financing after the developer mortgage tenor ends, 3) whether they haveadequate capital to pay a much higher monthly payment when the interest rategoes up, 4) whether they are prepared to drop two properties simultaneouslywhen the interest rate goes up and 5) whether they are fit to pass the bank’sincome test when the developer mortgage expires. He wrote that although theratio of a developer mortgage is very low as a percentage of the mortgagemarket, some developers’ mortgage loan books have grown multiple times inthe past year. (HKMA)