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Property sales start to recover in Shanghai

Shanghai's property market is beginning to stir again after a long slowdown, in part because of investors shifting money out of the stock market due to worries of a crash.

Property investment, prices and turnover are picking up compared with last year, recently released figures show. Analysts attribute the rebound in the residential market to lack of supply and funds moving out of stocks.

'Shanghai's new housing supply volume will be relatively small this year and next year,' said Kenny Ho, head of research for Jones Lang LaSalle in Shanghai. 'We have been seeing some investment coming back from the stock market into the property market again.'

A rise in stamp duty on stock transactions has brought the stock market down from record highs.

In the first four months of this year, Shanghai's investment in property development jumped 15.5 per cent year on year to nearly 41 billion yuan, the Shanghai Statistical Bureau said. It rose only 2.3 per cent for all of last year.

National and local measures to curb the property market started in 2004, limiting land supply in Shanghai. A crackdown on corruption which netted local property officials has also provided a damper. Although investment is picking up, new projects would take time to reach the market, analysts say.

Shanghai's residential price increases remain relatively moderate compared to other cities, but that is after falling 3.2 per cent last year, according to official figures.

The city's sale prices for residential property, both new and second-hand, rose 0.6 per cent year on year in April, the National Development and Reform Commission said.

Sale prices for new housing rose 0.3 per cent while prices for second-hand housing rose 0.9 per cent, the commission said.

'In some areas where supply and demand is not balanced, we find that newly built apartment buildings and houses sell very quickly. Meanwhile, the second-hand property market is getting more popular,' Mr Ho said. He forecasts a 10 per cent to 15 per cent rise in housing prices this year.

Local media have reported that some districts had started to strictly enforce a rule imposing a 20 per cent tax on profits from housing sales, but they later retreated, which could be positive for the property market.

'There is no change to the current policy about individual income tax on second-hand housing transactions,' Shanghai government spokeswoman Jiao Yang said.

Seller's market

Shanghai's property market is proving difficult to cool

21,848 new apartments were sold in the city last month, according to the Shanghai Daily.Compared with May last year this is an increase of 30%

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