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November 15, 2013

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Home » Business » Real Estate

New housing rules may crimp demand

By Feng Jianmin | November 15, 2013, Friday | Print Edition

Shanghai’s new rules to tame housing prices may hurt demand and burden smaller property developers with a liquidity crunch over the next three to six months, Moody’s Investors Service said yesterday.

“Among the seven new policies, the most notable ones will increase the land supply for residential use by 30 percent to 1,000 hectares by year-end and raise the down payment required for second-home purchases to 70 percent from 60 percent,” Moody’s said.

The government’s effort to slow the rise in home prices is credit negative for developers operating in Shanghai because the curbs are likely to pressure sales volumes and prices, it said in a note.

These measures are likely to reduce demand for housing in the city over the next three to six months because homebuyers are apt to curtail their purchases while they wait for more clarification on the rules, Moody’s said.

The other changes include raising the threshold qualification for non-locals to buy a property and expanding coverage of the affordable housing program, according to the local housing authorities.

Shanghai unveiled the rules last Friday after housing prices soared 20.4 percent in September, the fifth straight month that prices in the city have risen above 10 percent year on year.

 

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