By Li Hongmei

Speculators in China's housing market have found a way to go around house purchase restrictions imposed by the government by buying foreclosed properties, the Beijing Daily reports.

"The government will not check if you are qualified to buy a house in Beijing. As long as you have the document confirming the sales, you can apply for a transfer of the property," said a woman surnamed Zhang, who told the newspaper that she had discovered this approach five years ago. A local government official confirmed Zhang's statement, stating that the transfer of inherited or foreclosed properties is not regulated by the purchase restrictions, and that this has become a loophole.

Moreover, foreclosed houses are usually sold at prices lower than the market rate, making them more popular among speculators, the newspaper pointed out. For instance, a three-room house in Beijing was set to be auctioned off for an asking price of nearly 10 million yuan (US$1.65 million) early last year, but the price was lowered to 8.5 million yuan (US$1.4 million) in July because no one bid for it.

The house was eventually sold for 9.28 million yuan (US$1.53 million), and was up for sale a month later, this time with a price tag of 12.9 million yuan (US$2.1 million), the newspaper said.

But this is not for real home buyers, said Zhang Xu, an analyst with realtor Homelink, since auctioneers require full payment for transactions involving foreclosed houses, and do not accept payments in installments.