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Housing prices in Shanghai expected to be stable this year

HOME prices in Shanghai will probably remain stable this year despite an expected retreat in transaction volume because of existing tightening measures as continuously falling inventory across all submarkets might offer little room for price cuts.

Citywide, average cost of new residential properties, 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$5,517) per square meter in 2016, according to a latest annual report released by Shanghai Uwin Real Estate Information Services Co. That compared to an 18.1 percent price gain in 2015 and a 12.4 percent increase in 2014.

More than 13.89 million square meters of new homes were sold across the city during the 12-month period, a year-on-year decrease of 7.4 percent, a result of 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 transaction volumes as new restrictions dampen demand," said James Macdonald, head of China research at Savills, a global real estate services provider. "Shanghai's recent policies and actions by authorities have indicated a clear intention to regulate and strengthen supervision of developers, agencies and home purchasers."

In its latest and also the widely acknowledged toughest blow to cool the overheated housing market, Shanghai in late November raised the downpayment for first-time home purchasers and announced stricter definition of second-time buyers who have to face a minimum 50 percent or 70 percent deposit.

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

By property types, inventory of new apartments in Shanghai stood at about 5.1 million square meters at the end of last year, compared to 8.7 million square meters recorded a year earlier and 10.5 million square meters at the end of 2014, Uwin data showed.

For townhouses and stand-alone villas, meanwhile, their stocks also fell to 1.15 million square meters and 895,500 square meters, respectively, at the end of December. That compared to 2.24 million square meters and 1.23 million square meters registered at the end of 2015, respectively.  


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