Home sales slump in Shanghai, Shenzhen after new curbs
Following a series of tightening measures, residential markets in Shanghai and Shenzhen have slumped for the first time after a yearlong boom.
Some 283,600 square metres of residential space was sold in Shanghai in the week from March 28 – a drop of 60 per cent from the previous week – according to Shanghai-based Uwin Real Estate Research Centre. Prices also fell, by 3.4 per cent.
Labelled the toughest property cooling measure ever in China, Shanghai on March 25 announced new curbs for non-Shanghai buyers, requiring them to show proof of payment of taxes or social insurance for five consecutive years. Earlier, it was two of the preceding three years.
The new rules also raised the minimum down payment for second homes from 40 per cent to 50 or 70 per cent, depending on the size of the units.
Prices of new homes in Shanghai rose 25.1 per cent year on year last month. Shenzhen saw the biggest growth among 70 cities, with a rise of 57.8 per cent, according to China’s National Bureau of Statistics.
In Shenzhen, sales volume in both new and second-hand markets also fell last week, according to David Hong, head of research at China Real Estate Information Corp, a subsidiary of E-House (China).
A residential project in Nanshan that came on the market on March 30 could sell only half the units, he said.
“Before the curbs, usually 60 per cent of new projects would be sold,” said Hong.
The slump followed the Shenzhen municipal government’s decision to raise the minimum down payment for a segment of buyers from 30 per cent to 40 per cent. Non-Shenzhen buyers would now be required to show proof of payment of social insurance or individual income tax for three consecutive years in order to qualify for home purchases, instead of the one year stipulated earlier.
From April 1, the Shenzhen government has also raised by up to half the appraisal value of properties on the basis of which sales taxes and fees on property transactions are calculated.
According to Collier International, these tighter measures are expected to slow down the number of transactions in both the primary and secondary markets in the short term, with implications for prices, but that prices will continue to grow in the medium and long term. The property consultancy also says the new set of measures will check property speculation.