Policy moves boost secondary home sales in Beijing and Shanghai
Rule changes and cuts in interest rates trigger surge in transactions in the secondary market in Beijing and Shanghai but prices remain stable
Transactions of second-hand homes in Beijing hit a 25-month high last month while sales in Shanghai soared to the second-highest in history as recent government policies spurred supply and demand, the latest SCMP-Century 21 index showed.
"Red flags [were raised] in Beijing and Shanghai's housing markets throughout April," said consultancy Century 21 China Real Estate, the partner of the South China Morning Post for the index.
Sales in the mainland capital soared 44.4 per cent on the month and 101 per cent on the year to 19,071 units. Such a record came with a monthly price increase of 0.5 per cent to 42,057 yuan per square metre, quickening from March's gain of 0.3 per cent.
In Shanghai, transactions surged 72.8 per cent from March and 122.5 per cent from a year earlier to 38,248 units. That was only second to a peak of 70,500 units in March 2013 when transactions were frontloaded to avoid a capital gain tax of 20 per cent, which took effect the following month.
As a result, the SCMP-Century 21 secondary home price index remained unchanged at 160 in Beijing and 144 in Shanghai.
Century 21 said the business tax exemption for sellers who had owned the homes for more than two years, announced in March, had unleashed more supply, while other policies such as interest rate cuts and lower down payments had prompted both first-time and second-home buyers to enter the market.
"The high levels of inventories and transactions in Beijing's secondary market will reduce the possibility of sudden price fluctuations, and a steady price will further propel a rebound in transactions," the consultancy said.
Adding to the national-level policy relaxation, Shanghai last month doubled the amount local families can borrow from the government's housing provident fund to 1.2 million yuan at mortgage rates much lower than those at commercial banks.
In year-on-year terms, secondary home price in Beijing dropped for an eighth month, by 0.5 per cent in April, but it recovered from a 1.3 per cent fall in March.
Shanghai had a gain of 1 per cent, slowing from March's 1.1 per cent increase.
The financial hub has so far escaped a year-on-year decline in secondary home prices since the nationwide property downturn started in February last year.