Shanghai has enacted a new rule requiring homeowners to pay off their mortgages before selling property, the boldest measure yet in new efforts to cool surging real estate prices.

The new regulation, which took effect Tuesday, required property owners to pay off their entire mortgage before transferring a deed to a buyer, an official at the Shanghai Housing and Land Administration Bureau said Thursday.

Property owners can still sell if they find a buyer willing to put down the entire balance of the mortgage as a down payment to pay off the loan.

The official at the housing bureau said the policy was aimed at preventing speculative property transactions, the main engine behind the double-digit increases in average real estate prices in Shanghai in the past few years.

In another new measure, the Shanghai government is extending the waiting period between the sale and transfer of ownership for property to 28 days from the previous seven, the bureau said in a statement.

To discourage the speculative dealings that have driven prices skyward, the city last month decreed a 5.55 percent capital gains tax on sales of property within a year of purchase.

Source: Shenzhen Daily/Agencies