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Rumors of new curbs denied as home buyers rush to seal deals
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SHANGHAI Housing and Urban-Rural Development Commission yesterday denied rumors that a fresh round of curbs would be imposed on the city’s soaring property market as it tried to ease the nerves of house hunters enjoying relatively low down payments.
“The commission hasn’t discussed the possibility of such policies,” the commission announced via the official Wechat account, Shanghai Release.
“Shanghai will continue to carry out current rules to maintain a steady momentum of property transactions.”
The rumors of possible curbs ignited the city’s property market at the weekend. A total of 5,009 housing deals were signed last week in Shanghai, a surge of 93 percent in terms of transaction area on a weekly basis, according to data compiled by Centaline Property Agency.
The purchasing frenzy caused the official website of Shanghai Real Estate Trading Center to crash temporarily on Sunday, a repeat of the last crash five months ago that happened right before the last set of measures was taken to slow price increases on March 25.
Rumors swirled that possible curbs this time round might include raising down payments for first-time home buyers to 50 percent of a property’s value from 30 percent, and to 70 percent for buyers borrowing to buy their second property or more, market insiders said.
The rumors also caused a long queue to form at a civil affairs bureau in Xuhui District yesterday, 21st Century Business Herald said, as house buyers who divorced could be considered as a single person with no house and so be treated as first-time home buyer and enjoy the preferential interest rates in Shanghai currently.
A China Bohai Bank analyst surnamed Zhan said that it is certain there will be efforts to cool property prices.
“They tend to use administrative measures when something can’t be totally controlled by market-oriented means,” Zhan said.
In March, after soaring prices fueled a buying frenzy, the city government tightened approval criteria for non-resident homebuyers, raised down payment requirements for some second homes and banned unregulated lending.
On August 18 and 22, auctions for four land parcels in Shanghai were suspended in a sign interpreted by market players that the authorities are unwilling to see land prices surge too fast.
But both purchasers and banks are still enthusiastic on the property market in the long term, with most of the banks in Shanghai giving a 10-percent discount on mortgages to attract borrowers.
“If you check banks’ reports, you will find mortgages account for the majority of new loans,” said Li Xunlei, chief economist at Haitong Securities in Shanghai. “Banks consider it as premium assets with lower bad debt ratio, and will probably expand the business in the near term.”
Shanghai-based Pudong Development Bank extended 337.9 billion yuan (US$50.6 billion) in housing loans during the first-half of this year, with a bad loan ratio of 0.45 percent, the lowest compared with other types of loans.
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