Shanghai leads effort to rein in housing market
Updated: 2013-11-08 23:57
By WANG YING in Shanghai (China Daily)
The municipal government of Shanghai announced on Friday new measures designed to cool down the local housing market. They include raising the required down payment on a property if it is a buyer's second home.
"So far this year, home prices have been fluctuating greatly, and with transaction volumes ascending recently, home prices are under greater upward pressure," said a notice posted on the official website of the city's housing regulator explaining the background for the rollout of seven-point new measures.
Along with making a commitment to increase the housing supply and expand housing support to more low-income families, the housing regulator also vowed to implement "differentiated" policies toward homebuyers — policies embodied in two new changes.
The first change is to increase the down payment for second-home buyers from 60 percent to at least 70 percent of the property's transaction value.
The second change is to raise the number of payment years of social security fees or taxes for families that don't hold Shanghai's permanent residency permit, or hukou, from at least one year to two years before they can buy homes.
Several analysts weighed in on the policies, which were announced one day ahead of the beginning of the Third Plenary Session of the 18th Central Committee of the Communist Party of China.
"This is a gesture of displaying the local government's efforts to implement the central government's decision to tame rampant housing inflation," said Yan Yuejin, a researcher with E-house China R&D Institute.
According to the new measures, on the basis of the average annual supply over the past five years, Shanghai will expand its land supply for housing construction by 30 percent, or 1,000 hectares, this year.
"Clearly, the new policies are aimed at a key factor of the home market, which is unbalanced supply and demand. Increasing supply will help ease the rising demand for owner-occupied homes," said Chen Sheng, vice-president of the China Real Estate Data Academy.
As with the tightening policies Beijing issued in late October, the Shanghai version takes particular aim at purchases of second homes.
"For most people, the increase of the down payment for second homes will directly increase their home purchasing cost, and it is possible that some of them will give up their buying plans," said Yan.
Furthermore, those without hukou will be forced to wait before they are eligible to buy an apartment in the city, which will also cool down the market.
The average new home price in top 10 cities, including Beijing and Shanghai, was 18,533 yuan ($3,030) per square meter in October. That was up 1.95 percent from September and 15.69 percent from the previous year, both exceeding national levels, according to a report from the China Index Academy, the research arm of SouFun Holdings Ltd, owner of the nation's biggest real estate website.
From January to September, average new houses were traded at 18,717 yuan per sq m in Shanghai, up 18.72 percent year-on-year, topping the four major cities.