Beijing and Shanghai secondhand home sales get boost from supportive policies

Transactions in the secondary home markets in Beijing and Shanghai picked up last month, driven by the government’s strong signal to support the industry and a series of favourable policies, the latest SCMP-Century 21 index showed.

“Homebuyers’ sentiment was boosted towards the end of the year by a number of supportive policies such as five interest rate cuts and mortgages on second homes being treated in the same way as the first ones as long as the buyer has paid off the first loan,” said consultancy Century 21 China Real Estate, partner of the South China Morning Post for the monthly index.

The average asking price for existing homes in Shanghai jumped 2.2 per cent month on month in December, the biggest increase in two years. Beijing saw a rise of 0.7 per cent, extending the 0.01 per cent gain in November.

This marked the 16th and the 15th consecutive months of increases in the capital and the financial hub respectively amid a broader market slowdown and oversupply.

“Demand in Shanghai got released at the end of the year as both the rates of commercial mortgages and the housing provident fund loan hit historic lows,” Century 21 said. “Transactions for large units appear to be on the rise after the government allowed families to have a second child.”

The SCMP-Century 21 secondary home price index last month climbed to 167 from 165 in November in Beijing and was up to 157 from 154 in Shanghai.

Transactions in Beijing increased 29.5 per cent from November to 25,202 units while Shanghai saw sales grow 11.6 per cent to 44,546 units.

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The People’s Bank of China lowered interest rates five times last year to lure homebuyers back to the market. And expectations still run high that the authorities will roll out further rate cuts this year to sustain the recovery in the housing market so that it can support economic growth.

“The market will be more stable in 2016 after the full release of demand last year. Meanwhile, market momentum tends to have calmed,” said Century 21. “We expect the growth in prices and transactions in Beijing and Shanghai will be mild this year.”

On a yearly basis, prices in the secondary market rose 5.1 per cent to 43,647 yuan (HK$51,897) per square metre in Beijing and jumped 10.8 per cent to 37,956 yuan per square metre in Shanghai.