Shanghai residents eager to own flats in the city must move quickly as banks loosen credit , because of expected price rises. Zhang Hua, a 40-year-old engineer with a research institute at Shanghai Jiao Tong University, for instance, said he must land a deal soon, because the pre-owned home market in mainland China’s commercial and financial capital was showing signs of a strong recovery. “ The banks are extending more mortgage loans to homebuyers, and pent-up demand will release soon,” he said. “An increasing number of transactions will result in rising home prices.” Banks have of late ditched tightening measures introduced mid-2021 by Beijing to cool down an overheated property market . Last year, to curb demand they had, for example, slowed loan approval processes, taking as long as 50 days to sign off on mortgages, according to a study by the Beike Research Institute, which surveyed the average waiting time across 72 major Chinese cities in June. Which indebted moguls feel the most heat at China’s ‘Two Sessions’? However, the slow growth in mortgages since the middle of last year adversely affected local banks’ performance. Two officials with Shanghai-based lenders said that commercial lenders were now under pressure to accelerate mortgage lending. The approvals procedures in Shanghai has been shortened by banks to 10 to 20 days amid lower mortgage rates, as a result. Shanghai to build 220,000 rental homes in bid to tame soaring house prices “My parents have relocated from Guangdong province to Shanghai and I have to buy a flat for them,” Zhang said. “I felt extremely frustrated as I could not access enough funds to complete the purchase.” The number of mortgage loans approved has risen in accordance with an eased monetary policy since the beginning of 2022, said Xia Dan, an analyst with Bank of Communications. “A stable property market in Shanghai could convince lenders to grant more mortgage loans,” she added. Lenders in the city granted 197.8 billion yuan (US$31.3 billion) in fresh credit to local households, including mortgage and consumption loans, in January, according to a report by the Shanghai branch of the People’s Bank of China. The value of new loans was, however, 22.9 billion yuan less than the same month last year. Shanghai, Chongqing show how buyers ignored China’s property tax “Bank loans always play a vital role in the housing market, and eased credit has prompted potential homebuyers to actively chase flats that are to their liking,” said You Liangzhou, owner of Baonuo, a property agency in Pudong, Shanghai. “But they have to be prepared for a huge price jump, since existing owners will not sell unless buyers offer a high price.” More than 12,000 secondary home transactions have been conducted in Shanghai monthly since December last year, signalling a bullish mood, You said. A turnaround in the local housing market occurred in December after the conclusion of Beijing’s annual central economic planning conference, during which top policymakers said economic stability must be ensured in 2022. The government also pledged to front-load policies to shore up economic growth and maintain social order. Shenzhen’s 2021 home sales falls to 15-year low amid market freeze The annualised mortgage rate for first-home buyers in Shanghai has this month been reduced to 4.95 per cent from 5 per cent, amid a cut in the loan prime rate (LPR) rate, which is guided by the central bank. For those buying a second flat , the mortgage rate has come down to 5.65 per cent a year from 5.7 per cent. “Shanghai is among the few cities in China where residential properties are always highly sought after, amid an increasing inflow of residents from other parts of the country,” said Jack Chen, a local white-collar worker who is looking to buy a flat in Shanghai. “I have to win a race against other buyers to seal a deal. Otherwise, a home price hike will cost me extra.” The average price of secondary homes sold in Shanghai last month stood at 64,485 yuan, 0.5 per cent higher than in January, according to property market data provider RVMS. It also represented an 8.5 per cent year-on-year increase.