China’s central government announced on Friday that it will raise the monthly mortgage fees for buyers of residential property from 1,500 yuan ($20) to 2,000 yuan ($32) per month, as part of a push to curb property speculation.
The announcement comes just two days after President Xi Jinping unveiled a crackdown on property speculation that has seen property prices plummet over the past two years.
The Central Bank of China (CCB) announced on its website that it would raise the mortgage fees to 2% from the current 1%, and that property owners who already have mortgages on their properties will be able to pay more, the official Xinhua news agency reported.
The monthly increases will apply to new residential properties, but not to existing ones.
The move is aimed at making the market more competitive, said Xu Mingjie, an analyst with Beijing-based China Securities Finance Corporation (CSFC).
It will help alleviate some of the pressure on the market, Xu said.
“If you think about China’s housing market, prices are high and the quality of the homes are very poor,” Xu said in an interview with Al Jazeera.
“It’s a really good strategy to encourage new home building, but also to make sure the market is not dominated by big players.”
According to a report from Xinhua, Beijing-listed real estate firm Gensan International Co Ltd has already announced plans to raise the cost of its residential property by 1,800 yuan ($260) per year for five years.
It has also increased its minimum monthly mortgage payment to 2 million yuan ($3,600).
China has been taking steps to curb speculation and property price bubbles in recent years.
In November 2016, the Central Bank raised the minimum mortgage payment from 1 million yuan to 2.3 million yuan for new loans from 2023.
The minimum monthly payment for existing residential loans is set to increase to 3 million yuan per month from 2 million.
Last month, the government also announced that property prices would be reduced by 30% over five years, and that banks would also cut down their lending to residential real estate.
The government also said it would increase the annual mortgage payment for new residential property loans by 10% over the next five years from 3 million to 5 million yuan.
Xu said the government’s move could help ease some of China’s concerns about property prices, but noted that it was too early to know if the move would have a significant impact on the Chinese economy.
“I’m not sure if this is a significant shift,” Xu told Al Jazeera, “but it is definitely an important one.”
China is facing a housing crisis.
According to data from the Beijing- based CB Insights Institute, the average price of a home in the capital of Beijing is now $1.4 million.
The median price is $1 million, and it’s estimated that only one-fifth of homes are sold each year.
According to the CB Insight Institute, China is the second-most expensive country in the world for buyers, behind only the United States, and the most unaffordable, behind Hong Kong.
The CB Insought report said that the average monthly cost of housing in China was $2,600 last year, and some of that price is due to high prices for apartment rental and land prices.
China’s population is also ageing, and as people leave the country, demand for housing is likely to continue to grow.
According, the cost for housing in Beijing has increased by about 30% since 2011.
China’s housing bubble peaked in 2014 when real estate prices hit a record high of 6.5 trillion yuan ($9.5 billion) and the country’s real estate market is still in the midst of a correction.
In 2016, property prices reached their lowest point since 2009, when the bubble burst.
In 2016, China’s GDP grew by 7.9%, but the country remains heavily dependent on the export-driven economy.
The economy has also been struggling to recover from the impact of the global financial crisis.