Housing regulators in Zhoushan, a city in Zhejiang province, on Tuesday denied media reports saying they had loosened home purchase restrictions.

Local housing authorities said that the restrictions are still in place, but that they are carrying out a study on the demand of local residents who want to move to other districts in the city for their children's education needs, China Business News reported.

An insider who asked not to be identified told China Daily that Zhoushan authorities wanted to relax restrictions for a specific group of homebuyers, but that there's a possibility that the changes may not happen after the media reports.

On Monday, the media reports said that Zhoushan's government planned to allow families to buy one new apartment this year, regardless of how many houses they already owned. Zhoushan would become the second city in Zhejiang province to relax policy bans on home purchases, which were implemented nationwide in 2011.

"The city's new policy will be published within two months, according to which all families that haven't bought a flat this year can buy one," Chen Lina, an officer at Zhoushan's housing administration bureau was quoted as saying in the media reports.

As a third-tier city, Zhoushan doesn't fall into the central government's purchase restriction categories, and the city's real estate market is now stable after two years of development, Chen added.

The situation is being keenly watched by local real estate firms.

"I don't know the details, but I was told by my superior that according to the new policy, families will be allowed to buy one more apartment now," a salesman at a residential project in Zhoushan told China Daily on Tuesday.

Analysts noted that there might be an excess of supply in Zhoushan.

"The city built a lot of residential projects over the last few years, which put the local government under pressure to find ways to digest the housing inventory," said Hui Jianqiang, research director of Beijing Zhongfang-yanxie Technology Service Ltd.

According to Hui, there's a rising market expectation for the removal of the harsh curbs on home purchases.

Li Tie, director of the China Center for Urban Development of the National Development and Reform Commission, said that authorities should reduce administrative regulations on the property market, which have increased homebuyers' difficulties in getting mortgage loans, but failed to curb price rises.

"To combat property speculation we should rely on the market," Li said. "And the government should tolerate mild increases in housing prices."

Meanwhile, if Zhoushan does loosen property curbs, other local governments might follow the move, Hui added.

But Song Huiyong, director of the research and consultation department at property consultancy Shanghai Centaline, believes that Zhoushan's planned policy would go too far, if implemented.

"By encouraging families to buy new property, this policy would go against the central government's spirit of taming speculation," said Song.

Heated land auctions are spreading from first-tier cities such as Beijing and Shanghai to second-tier cities, and local land auction records are being broken at a faster pace.

In early September, a residential land parcel located near Beijing's East Third Ring Road was bought by Sunac China Holdings Ltd for 73,100 yuan ($11,880) per square meter of buildable space, becoming the nation's most expensive land in sq m terms.

Wei Tian in Shanghai contributed to this story.

wangying@chinadaily.com.cn

(China Daily USA 09/18/2013 page14)