Shanghai’s April home sales hit 4-year low
Home transactions continued to decline in Shanghai, China’s financial capital, as government cooling measures take effect and more home buyers take on a wait and see attitude.
The area of new residential properties sold in Shanghai in April dropped 8.8 per cent from March to 677,000 square meters, according to data from Shanghai Centaline Property Consultants. The volume was a 30 per cent slide from the year-earlier period and represented the lowest April figure since 2013.
Average monthly selling price also declined 1.1 per cent from the previous month to 46,900 yuan per square metre.
Lu Wenxi, senior manager of research at Centaline said sales for high-end projects were under greater pressure and the trend will likely persist for another one or two months.
To curb runaway home prices, the city authorities have been controlling the selling prices of flats and postponing the issue of sales permits for luxury developments since late last year. The minimum down payment requirement for first-time homebuyers was also raised to 35 per cent from 30 per cent.
The tightening policies show no signs of easing. On Monday, a number of major banks in Shanghai have reportedly cut the discounts offered to less than 5 per cent off the benchmark rate, from as much as 10 per cent previously.
The curbs in Shanghai is part of the nationwide drive to crackdown on the property bubble in the hot cites since the fourth quarter of last year.
As a result, the city’s new home sales by floor area plunged 69 per cent in the first three months this year, according to DTZ/Cushman & Wakefield.
“We have little doubt that the government can achieve its goal and advise investors not to underestimate the policy impact,” said Alan Jin, a property analyst at Mizuho Securities.
In light of de-leveraging plus de-risking measures in China’s financial system, the property sector may see even tighter credit conditions than the other sectors towards the end of the year, he added.