CHINA may extend policies to curb house purchases to other second-tier cities, as Taizhou in Zhejiang Province became the first such city to rein in housing speculation by restricting buying.

Taizhou has restricted buying of new homes by local families who own two or more apartments and has also extended the policy to non-local registered families if they can't provide residence permits or documents to prove that they have been paying social security or income tax for 12 months in the past two years, Xinhua news agency reported at the weekend quoting a statement issued by the Taizhou government.

"It may signal that the restrictions will expand (to other cities)," said Lu Qilin, an analyst at Shanghai Deovolente Realty Co. "It is time to take action when speculators, who are barred by the housing purchase restrictions in metropolises like Beijing and Shanghai, have been going to smaller cities."

There are media reports saying housing prices in Taizhou have risen rapidly in recent years, especially soon after nearby first-tier cities implemented the restriction policies.

"Although Taizhou's economy has grown rapidly, which supported rising property prices, the large inflow of speculative funds will easily create a dangerous bubble," Beijing News said yesterday. It added that the newly-enacted policy in Taizhou may curb rising prices.

Housing transactions have remained lukewarm in Beijing and Shanghai since their governments launched policies to curb home buying earlier this year as they attempt to cap soaring prices.

In Shanghai, new homes sales slumped to a five-month low in the week before last although they rebounded slightly last week, but the overall sentiment remained weak.

Some analysts were worried local governments in second-tier cities may be reluctant to use such curbs for fear of hurting their property sector, which drives their economies.