Now let's take a look at the housing market. The State Council has issued various policies to curb speculation. These include tightening loans for second home purchases. But are banks following this order?

Commercial banks in Shanghai have already tightened loans for non-local buyers.

A clerk of Shanghai Brach of China Merchants Bank, said, "Buyers have to show proof of annual tax liability, which tells us you have worked in Shanghai for a year. Otherwise, we can't issue loans."

Home buyers who have previously purchased a home, no matter whether on credit or not, will not enjoy loan discounts on second home purchases.

He said, "We will look into the property registration system and public credit registries. In case of possession of a home outside of Shanghai, if we can track that on the property registration system, everything will follow the policy of second home purchases."

Banks are using public credit registries and local property registration systems to determine if buyers' purchases of homes fall into the second home category. But there are difficulties in tracking non-local home possessions. And many banks are still investigating only through public credit registries.

He also said, "If buyers have fully paid off their first home there will not be any home loan record in the public credit registries."

The central government has taken serious measures to curb housing speculation. As a latest move, tightening loans for second homes has not been fully put into effect due to difficulties in the property registration system.

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