Image: Visitors at a housing fair in Shanghai
Qilai Shen  /  EPA
Visitors attend a housing fair in Shanghai, China, on Tuesday. Even though the government announced fresh measures to subdue bubbly real estate prices, housing prices have regained their upward momentum, especially in major metropolitan areas such as Shanghai and Beijing.
By
updated 10/7/2010 11:16:23 PM ET 2010-10-08T03:16:23

Authorities in China's largest city have ordered that families be allowed to only purchase one home each, part of a series of moves aimed at cooling surging property prices.

"One family in Shanghai, whether local or migrant, can only buy one new home, including a secondhand one, for the time being," said a notice issued late Thursday by the municipal government, citing a need to curb "irrational demand."

Their investment options limited by various government restrictions, many urban Chinese families purchase apartments in hopes of getting higher returns on their savings than the paltry interest paid by banks on savings accounts.

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Many of the apartments, often owned by out-of-towners, sit empty. That limits supply relative to demand and is blamed for driving prices beyond the reach of many families, a trend seen as a threat both to political stability and to the financial system.

Overall, housing prices in 70 major Chinese cities rose 9.3 percent in August from the year before.

The new rule for Shanghai, a city of more than 20 million, took effect Thursday. China's capital, Beijing, imposed a similar one home per family restriction in April.

The city government said it was preparing to impose a property tax, another measure due to be rolled out on a trial basis in several major cities.

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The notice also said property developers would be charged a land-appreciation tax of 5 percent on the selling price of residential buildings sold at an average price that is more than twice the average price of the previous year in the same area.

It did not give exact details on how such prices would be calculated.

Late last month, the government suspended bank loans for third-home purchases and raised required downpayments for purchases of first and second homes.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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