China limits mortgages to foreign investors

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The Chinese government has announced plans to limit mortgage loans on property purchases to foreign property buyers.

According to Bloomberg, this has been done in a bid to cool prices in the Chinese property market.

It has been reported that the nation’s planning agency will not approve medium or long-term foreign debt quotas from overseas if they intend to use the funds to take out a mortgage in 2012.

The National Development and Reform Commission published a statement saying that the government will maintain any ‘curbs’ on the property market to bring prices down to a reasonable level.

Last year, China increased the deposit levels on mortgage rates and a number of housing purchase restrictions were imposed in approximately 40 cities.

Speaking to Bloomgberg, James MacDonald, Head of China research for Savills Property Services, said; “This is actually only going to have a perceivable impact on the mid-to-high end of the market. Foreign buyers only make up a tiny proportion of the overall China market and are not very active in the ultra high-end or mass market.”

In November 2010, China ordered all foreign first time homebuyers to show proof that they didn’t own properties in the country along with proof of at least a year’s employment in the country before they could purchase a property.

There are around 1 million non-Chinese residents living in the country out of its 1.3 billion population. Many foreigners in China might not buy properties, according to Mr MacDonald.

Transfer Money to China

If you are looking to invest in China, think carefully about how you will be transferring money to China.

Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are sending money to China– which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.

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