(Yicai Global) Jan. 22 -- Shanghai unveiled new housing purchase restriction policies today amid an irrationally booming property market to combat cheat purchases via sham divorces, adjust the value-added tax exemption period, and satisfy families without housing through prioritization.

The number of housing units owned by either of a divorced couple will be calculated based on the total number of units the family owned before the divorce if one or both ex-spouses purchase housing within three years from its date, according to an opinion the Shanghai Housing and Urban-Rural Construction Management Committee, the Shanghai Housing Administration Bureau and six other agencies issued yesterday.

It also adjusts the value-added tax exemption period. Those who sell housing in five years or less from the purchase date will have to pay full VAT.

The city will prioritize houseless families in the house-buying lottery system for new housing, strictly manage sales and carry out real-name management.

It will also increase the supply of commercial housing, above all around suburban rail lines, other transit stations and new cities.

Locating Loans

Commercial banks must intensify the verification of the source of the down payment funds and the debt-to-income ratio of home buyers to stop loans for other purposes from illicitly flowing into the real estate market, the opinion also stated.

Restrictions on divorced couples’ home-buys in the opinion will close loopholes, while the adjusted VAT exemption period will raise the stakes for new house speculation. An improved house-buying lottery system and priority given to families without housing will protect the rights and interests of buyers with demand so rigid, market analyst Lu Wenxi with Centaline Property told Yicai Global. Extending the VAT exemption period can lessen transfers of second-hand housing and bring its price back to a rational level.

“Many tools in the policy reserve have not been used, such as the sales restriction. Shanghai may possibly make up for shortcomings by further adjustments, if the property market maintains its irrational rises in March and April,” Lu said.

The city's second-hand housing price rose by 6.3 percent last month in a 48.1 percent rise from the same time in 2015, according to recent data from the National Bureau of Statistics of China. New home prices grew an annual 4.2 percent last month in a 56 percent jump from December 2015.

Editor: Ben Armour, Xiao Yi