Chinese cities curb property loans Several Chinese cities have tightened controls on housing loans, in a move that could herald broader policy tightening in response to a resurgent property market. Cities in the wealthy provinces of Zhejiang, Jiangsu and Guangdong have in recent days increased minimum borrowing requirements, or capped the size of loans available to home purchasers tapping their local housing provident funds. The new restrictions mark a policy shift from last year when dozens of cities made housing loans more easily available in a bid to boost the flagging property sector, which is widely seen as the most important motor of Chinese growth. Property prices have started to rebound since late last year, and the shift in the provident fund rules is a sign of how officials are now trying to rein the market in before it picks up too much steam. Local governments regularly use tweaks to the provident funds, which support first-time home buyers by subsidising mortgage payments, as a way of controlling the overall property market. China's new home prices rose 1 per cent in January from a month earlier, according to a survey of 100 cities published by SouFun Holdings, one of China's leading real estate web portals. That was the biggest gain in two years and the eighth consecutive month of increasing home prices. Transactions have also shot up. Home sales in 27 major cities increased more than sixfold during the Chinese New Year holiday last week compared with a year earlier, according to SouFun. Kunshan, a city in Jiangsu province just west of Shanghai, was the latest to tighten its rules on provident funds. The local government said this week that starting from next Monday, residents would need to have paid into the fund for more than a year to be allowed to apply for assistance, up from a previous minimum of six months of contributions. Earlier, Dongguan in Guangdong province and Jinhua in Zhejiang province placed lower ceilings on the amount that home buyers can borrow from the funds. The tightening hit the share prices of property companies on Tuesday. Vanke, China's biggest listed developer by sales, fell by more than 4 per cent. The overall framework of China's property policies has been restrictive since 2010, when the government intervened with heavy-handed measures to prevent the market from inflating into a full-fledged bubble. Beijing raised downpayment requirements, limited funding to developers and prevented people from buying second homes in dozens of the country's frothiest cities. While keeping those restrictions in place, local governments eased the provident fund rules last year because of concerns that the downturn was becoming too severe. The property market was also given a lift last year from a relaxation of monetary policy by the central bank, which cut interest rates twice and injected liquidity into the financial system through its open market operations. In an indication that the People's Bank of China might also be changing gears, it withdrew Rmb30bn from the money market on Tuesday through a 28-day repurchase agreement, the first time that it has directly drained liquidity in eight months.