Bank loans to local developers in Shanghai recorded their first month-on-month decline for 2017 in October, after a slump in home sales and a bleak outlook curbed the appetite for new construction. Loans to developers declined by 3.6 billion yuan (US$542 million) in October compared with September, when loans increased by 11.7 billion yuan, according to the central bank’s Shanghai head office. Growth in mortgages also slowed, as individuals secured 6 billion yuan more from banks compared with September, while in September the increase was 26.1 billion yuan. The latest numbers echoed October’s historic low new housing supply data. According to Homelink Shanghai Research Centre, only 7,400 square metres of new residential flats entered the market, a whopping 96.7 per cent plunge from September. Sold space also slumped by 36.8 per cent month on month. Historically, average monthly new supply in Shanghai hovers between 500,000 and 600,000 sq metres and in boom days, hits 1 million sq metres. Shanghai’s property cooling measures are unlikely to last The decreased new supply comes after the Shanghai government raised existing control measures to an unprecedented level last November, resulting in most residents losing the eligibility to buy homes while for the few eligible, mortgage has been difficult to apply for and increasingly expensive. Affected by weak sales and regulated prices, developers are unwilling to accelerate construction on acquired plots and put properties on the market. “The whole market is virtually frozen, from primary to secondary market,” said Yang Kewei, an analyst at Shanghai-based consultancy China Real Estate Information. “Developers seldom open construction on the sites they acquired in 2016, so it is natural they don’t have much financing need. Besides, banks’ scrutiny also intensified.” Even though the Shanghai government put more land up for auction this year, developers have little appetite because many are for rental home development, and developers are asked to hold certain portions not for sale, or if sold, then at government-sanctioned prices, analysts said. Yang said that with few new homes on the market, those who otherwise would sell their old homes for new, larger ones have put their purchasing on hold, thus affecting the secondary home supply as well. The slump in sales has cut both developers and individuals’ confidence in the market.