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Shanghai witnesses record high new-home transaction ahead of new policy

By Cherry Cao | March 29, 2016, Tuesday | Online Edition

TRANSACTION volume of new homes rose to a record in Shanghai last week as buyers rushed to conclude their deals ahead of local government's rollout of property tightening measures aimed to cool the market.

The area of new residential properties sold, excluding government-subsidized affordable housing, jumped 48 percent week over week to 717,000 square meters during the seven-day period ended Sunday, Shanghai Centaline Property Consultants Ltd said in a report released today.

"That was the highest weekly volume registered in the city so far and about twice the average seven-day volume," said Lu Wenxi, a senior manager of research at Centaline. "As the latest batch of austerity measures are supposed to leave a significant impact particularly on the demand side, the local housing market is going to suffer subdued sentiment among home buyers which will probably lead to a drop in transaction volumes."

Shanghai launched on Friday a series of tightening measures to cool the city's overheated residential market which include a raised minimum down payment for second home buyers -- a minimum 70 percent down payment if the property is defined as a “non-normal” home and a minimum 50 percent if the house is “normal,” compared to the previous requirement of 40 percent -- as well as a higher threshold for non-local residents to qualify to purchase a house. They now need to provide tax or social insurance certificates confirming that they have stayed in the city for more than five consecutive years. Previously, they would be entitled to buy a home after a stay of 24 months accumulated over a three-year period.

The mean cost of these new homes jumped 6.7 percent to 34,084 yuan (US$5,220) per square meter, the first rebound in four weeks, according to Centaline data.

Citywide, outlying Jiading Distrct led all with about 110,000 square meters of new homes being sold last week. Among the city's top 10 most popular projects, half of them cost less than 25,000 yuan per square meter, an indicator of continuously robust demand from first-time home buyers.

On the supply side, 297,000 square meters of new houses spanning 11 projects were released to the market, a week-on-week surge of 54.7 percent and also the highest seven-day volume registered so far this year, according to Centaline data.

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