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Red-hot Shanghai property market
cooled
BEIJING -
Government measures to curb property speculation
are having an instant impact in Shanghai, the
country's hottest market, sending prices down and
buyers to the sidelines.
On Wednesday,
when the new property policies took effect, there
were 358 daily transactions of new homes in
Shanghai, compared to 462 on May 9 and 604 on March
16, according to eHomeday, Shanghai's biggest
property Internet portal. Average transaction prices
fell to 5,884 yuan (US$711) on Wednesday, down 19% from a
day before. But prices downtown remained stable.
The latest setback has many home buyers, property
agents and developers wondering if the wildly
overheated market has reached a turning point.
They seem uncertain about its future direction as
the full impact of the government measures has yet
to take full effect.
Property agents said
the strong measures aimed at clamping down on
property speculation will effectively curb demand
and affect sales of apartments in new projects. A
recent survey carried out by Colliers
International, a leading property services
provider, shows that 65% of buyers of units at six
property projects with an average price of more
than 12,000 yuan ($1,440) per square meter in
Shanghai were owners-occupiers, while the
remainder were investors, including some
speculators.
The survey shows the
proportion of investors in the Shanghai property
market is "unhealthily high," said Lina Wong,
managing director of Colliers International (East
China). Shanghai doubled its sales tax on luxury
homes to 3% from Wednesday - a response to a
recent central government directive to curb
property speculation.
Seven ministries,
including the People's Bank of China and Ministry
of Construction, issued a joint decree on May 11
that set out a wide range of measures to cool down
the property market, including a 5% tax on
property owners who sell at a profit within two years
of purchase. The decree, effective as of Wednesday,
allows local governments to make detailed policies
according to their particular situation.
Shanghai has also doubled property tax -
to 3% - on luxury homes, defined as those located
in the city center and costing more than 17,500
yuan ($2,108) per square meter with an area of
at least 140 square meters. Cheaper and smaller
flats are labelled "affordable," with the current
rate of 1.5% left unchanged.
The
property market had already been slowing down for the
last two months as it felt the chill of the
new policies in the lead up to Wednesday. The new decline
has prompted Wong to call this the "turning
point." Residential property prices in Shanghai
fell by an average 9% to 8,097 yuan ($978) per
square meter in April from the previous month. The
biggest fall in residential sales in terms of
floor area was in peripheral districts including
Zhabei, Putuo and Minhang. Together they
registered an average decline of 40% in April. The
number of transactions in the secondary market
also dropped - by 50% - during the period,
according to Midland Properties (China), a leading
estate agent based in Shanghai.
"It is
obvious that the market [has been] very quiet in
the past several weeks," said Calvin Lau,
Midland's regional director. "Understandably, many
potential buyers are holding back from making a
purchase while waiting for the dust thrown up by
the government actions to settle." Meanwhile, more
and more sellers are lowering prices to unload
their properties before the market can get any
worse.
Among these keen sellers are many
speculators, who are beginning to feel the
intensifying heat of the government-initiated
credit crunch. The Shanghai region is believed to
be the primary target of the government's
tightening-up policies as it has experienced wild
speculation in recent years. In some places in
Shanghai and neighboring cities such as Nanjing
and Hangzhou, property prices jumped three or
four-fold over the past three years. CCTV launched
a special report this week about how some
speculators in the region are vying to sell their
stocks before it is too late. While there are some
sellers asking every estate agent they can find to
promote their property, many agents have had to
shut down after not clinching a deal for weeks.
But some analysts nevertheless see a solid
leasing market. "Rental is expected to stay on a
rising trend because demand has already
outstripped supply resulting from the continuing
inflow of multinational firms to the city," said
Anton Eilers, regional residential director of
Colliers International. He said the company has
received a growing number of enquiries about the
leasing market in Shanghai, not only from Fortune
500 companies but also some little-known foreign
firms that plan to set up branches. Eilers
projected the luxury residential rental market for
expatriates to surge by 12% from its current level
of $23 per square meter per month, over the next
year. Echo Xu, from the human resources department
of Dulwich College Shanghai, told China Daily that
the housing allowance for its foreign staff had
already gone up 25% to $1,000 per month in the
past 12 months.
(Asia
Pulse/XIC) |
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