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March 25, 2016

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Shanghai to cool housing market

SHANGHAI will unveil several tightening policies today in a bid to cool the city’s overheated housing market as the government is concerned at the increasing number of home seekers being unable to cope with rising prices.

Possible measures may include a minimum 70 percent down payment for second-home buyers if the property is defined as a “non-normal” home, or a minimum 50 percent down payment for second-home buyers who buy “normal” houses, Caixin magazine reported on its website.

Second-home buyers now need to pay a minimum 40 percent down payment no matter it is a normal or non-normal home.

In Shanghai, normal homes are those no larger than 140 square meters and priced at less than 4.5 million yuan (US$691,000) within the Inner Ring Road, or below 3.1 million yuan if between the Inner and Outer Ring roads, or below 2.3 million yuan if beyond the Outer Ring Road.

In addition, commercial lenders can offer a maximum 10 percent discount in mortgage rates which are around 15 percent, or up to 17 percent at some smaller banks.

The government will also be harsher in defining whether a property is the buyer’s first home or not, and may raise the qualification threshold for non-local buyers to purchase a house in the city.

“While details of the tightening measures are yet to be released, we all expect to see them to come out sooner or later as the local market has turned red-hot particularly over the past few months,” said Hubert You, deputy general manager of Shanghai Wanye Enterprises Laoximen Real Estate Development Co.

“While the upcoming policies will surely affect every player in the market, their real impact will probably vary among projects and products,” he said.

The developer of Fuxing Royale, a luxury housing project in downtown Huangpu District, is now selling its apartments for around 120,000 yuan per square meter each. They were sold for between 80,000 yuan and 100,000 yuan per square meter when it was launched in June.

The National Bureau of Statistics earlier released data that showed house prices in China rising at their fastest pace in almost two years in February amid bullish demand in major cities.

First-tier cities, such as Shenzhen, Shanghai and Beijing, remained the top three in new home price growth, with the average cost up 56.9 percent, 20.6 percent and 12.9 percent respectively from a year earlier. Their price growth sparked wide concerns that such increases in large cities might not be sustainable.




 

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