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January 13, 2017

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Home prices seen stable in Shanghai

HOME prices in Shanghai will probably be stable this year despite an expected decline in transactions because of the current tightening measures, and falling inventories in all sub-markets offer little room for price cuts, according to an annual report.

The average cost of new homes, excluding government-funded affordable housing and covering all types of homes, jumped 19.4 percent year on year to a record 38,416 yuan (US$5,573) per square meter in 2016, said the annual report released by Shanghai Uwin Real Estate Information Services Co. The average cost rose 18.1 percent in 2015 and climbed 12.4 percent in 2014.

More than 13.89 million square meters of new homes were sold across the city last year, an annual decline of 7.4 percent, due to rein-in measures by the government, Uwin data showed.

“Shanghai residential prices are expected to remain firm in 2017, though there is expected to be a slowdown in transactions as new restrictions dampen demand,” said James Macdonald, head of China research at Savills. “Shanghai’s policies and actions by authorities have indicated a clear intention to regulate and strengthen supervision over developers, agencies and home buyers.”

Shanghai in late November raised the down payment for first-time home buyers and levied a stricter definition of second-time buyers who have to pay a minimum 50 percent or 70 percent down payment.

“Despite the new curbs, most developers remained upbeat given low inventories and solid demand from upgraders,” said Stephenie Zhou, head of project sales for JLL Shanghai. “Sales of both mass market and high-end homes are expected to stay low over the next 12 months as Shanghai’s housing policy stance will probably remain tight throughout 2017.”

The supply of new apartments in Shanghai totaled 5.1 million square meters at the end of last year, down from 8.7 million square meters in 2015 and from 10.5 million square meters at the end of 2014, Uwin data showed.


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