Municipal authorities in Shanghai tightened mortgage down payment requirements for second home purchases on Friday, in a move to cool an overheating property market and reduce fears of a bubble.
Senior Chinese leaders raised concerns about the country's overheated housing market during an annual parliament meeting this month, and Shanghai is the biggest city to take action in the wake of the National People's Congress, which ended a week ago.
Under the new rules, home buyers will need to put down 50-70 percent of the price of a second home, compared to 40 percent previously, to qualify for a mortgage.
"The new measure will have a big impact on market sentiment on both the primary and secondary market; new launches being sold out within one, two hours will not happen again," said Joe Zhou, head of East China research at real estate services firm Jones Lang LaSalle.
With the new rules, Shanghai also made it harder for non-residents to buy homes in the city, according to a statement issued by the local government.