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New homes sales hit 51-week high

By Cherry Cao | November 3, 2014, Monday | Online Edition

SEVEN-DAY sales of new homes surged to the highest in nearly a year in Shanghai last week as market momentum continued to recover, last industry data showed.

The purchases of new residential properties, excluding government-funded affordable housing, jumped 25 percent from the previous week to 334,900 square meters, or a 51-week high, Shanghai Uwin Real Estate Information Services Co said in a report released today.

“It was the fourth consecutive week that seven-day sales remained above 240,000 square meters, indicating improved sentiment among home seekers after an earlier central bank announcement of a cut in mortgage rates and minimum down payment levels for some buyers," said Huang Zhijian, chief analyst at Uwin. "However, real estate developers should remain cautious about their pricing strategy despite the recent recovery as inventories remain at a high level."

Buyers who own a home and have paid off their mortgage will be considered as first-home buyers and enjoy discounted mortgage rates of as much as 30 percent off the benchmark lending rate, the People’s Bank of China said on the last day of September. Previously, they had to pay 10 percent or more above the benchmark. In terms of down payments, the new rule is that all first-home buyers can pay as little as 30 percent of the total price, while the original rule stated a buyer of a second home was subject to a minimum 70 percent down payment.

Average cost of the new homes, meanwhile, rose 7.2 percent week over week to 28,436 yuan (US$4,639) per square meter, a result of structural changes, Uwin data showed.

Last week's spike also helped boost October sales to 1.09 million square meters, which was the highest monthly volume registered so far this year, according to Uwin. That was a surge of 42.5 percent from September, though year-on-year it dropped 22 percent.

"For first-tier cities like Shanghai, demand for homes always exists, so whenever the government sends positive signals, transaction will very likely pick up,” said Lu Qilin, director of research at Shanghai Deovolente Realty Co. "For the coming weeks, we expect sales to continue to rise while price hike is unlikely mainly due to the high level of inventories."

As of 4pm, new homes in Shanghai available for sale remained above 12.5 million square meters, according to the city's official real estate website fangdi.com.

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