Shanghai homeowners left to rue falling prices, as government stays committed to keeping property sector in check
- The Shanghai property sector will not benefit from monetary easing, since the local government is adamant about curbing price jumps, JLL China says
- Must face reality that the market is stuck in a downward trend, homeowner says
Quinn Wang, 48, a mid-level manager with a manufacturer of chemical products owned by the local government, is very disappointed by the Shanghai government’s efforts to keep home prices in the city under control.
Wang plans to sell one of the three flats he owns in Shanghai to pay for his son’s education abroad. “Frankly, it is disappointing to me that austerity measures [introduced] to rein in home prices will be unchanged this year,” he says. “I cannot afford to wait for a rebound since my son needs the money for his education urgently.”
A quiet market has already reduced his personal wealth by about 500,000 yuan (US$72,000) over the past two years, with the municipality maintaining a tight grip on the real estate sector.
“I could have sold the property at a higher price two years ago … It is a hard lesson for me that home prices could also turn out to be volatile, like the stock market,” Wang says.
Moves to ease mainland Chinese monetary policies had sparked speculation that the country’s property market would get a shot in the arm, with ample cash eventually driving up home prices.
In late December, China’s central bank decided to lower borrowing costs for businesses and individuals by embarking on the loan prime rate (LPR) mechanism and replace the old loan-pricing system. Early this month, the People's Bank of China also cut the required cash reserve ratio for commercial lenders by 50 basis points, injecting 800 billion yuan in liquidity into the financial system.