NewPanic buyers swarm Shanghai’s housing market amid speculation of imminent mortgage rules

Buyers swarmed into Shanghai’s housing market last week, in a panic buying spree for apartments that crippled a government website and set a five-month record for the amount of space sold, amid speculation that the city will tighten mortgage rules to cool the housing market.

The amount of space sold soared 93 per cent over seven days to a record 555,700 square meters, setting a five-month record, according to a report by Shanghai Homelink Real Estate Agency.

Buyers piled in amid speculation that Shanghai’s municipal government was planning to raise the down payment requirements on home buyers who don’t yet own a home, but have mortgage records in banks, to 50 per cent from 30 per cent.

Down payment would jump to 70 per cent from 50 per cent for people borrowing to buy their second property starting in early September, according to speculation. Mortgage rates would also be raised for those with their second or third mortgages.

Shanghai’s government on Monday denied any plan to tighten mortgage rules, but not before anxious buyers and property agents packed a government centre where real estate was traded. So many people went on the government’s web site that it was temporarily paralysed.

“Any further measure to curb the city’s home price rise will eventually lead to another round of soaring prices,” said Dong Yanjun, a homebuyer in Shanghai, who rushed to sign an agreement to buy a pre-owned apartment in Pudong last week. “I need a new dwelling for my own before the birth of my baby. I can’t afford to a higher down-payment requirement that is rumoured to take effect in September.”

Shanghai’s home prices jumped 27 per cent in July from a year ago, and rose 1.2 per cent compared with June, according to the National Bureau of Statistics.