Home » Business » Real Estate
Why property is still dear to buyers
April 21, 2010, Wednesday
|
Print Edition
Print Edition
SHANGHAI'S real estate market is more than just my workaday reporting assignment. It's also become an inescapable part of my social life.
So it came as no surprise, when I sat down recently with friends at a sunny rooftop cafe, that I was quickly bombarded with questions about property.
Common queries include: "Will home prices in Shanghai continue to soar?" "Shall I buy an apartment now or wait another six months?" "Is property a good investment?"
Reporting on an industry is one thing. Dispensing professional advice as though I am an industry expert is quite another. One might even argue that there are no such things as experts, just opportunists. At any rate, I wasn't prepared to say anything that might cause someone to put possibly hundreds of thousands of yuan at risk.
One thing is certain. There is no certainty in investing. And the property market has become a lot riskier as the government intensifies its efforts to deflate a bubble that could pop and threaten the whole economy.
I am always happy to discuss with friends, or in this case readers, some of the issues that feed into the property debate.
Take Shanghai, for example. The average salary here rose 8.3 percent last year to 3,566 yuan (US$522) a month, said a report late last month released by the Shanghai Human Resources and Social Security Bureau.
At the same time, price of new homes, excluding those designated for relocated residents under urban redevelopment plans, jumped 16 percent last year to 16,188 yuan per square meter, according to Shanghai Uwin Real Estate Information Services Co.
In December 2009 alone, the average new home price reached 20,187 yuan per square meter in Shanghai.
The figures speak for themselves. Housing affordability is sinking fast, and the government is alarmed about that. It blames speculators - people who buy property to make money, rather than house their families. Often, the speculators are from out of town or even overseas. They, of course, are betting that prices will continue to rise.
The government is attempting to convince them they are wrong.
Last Saturday, the State Council, China's Cabinet, allowed banks to suspend loans to people who already have two houses and want to buy more. It also warned banks against extending credit to buyers seeking third and more homes in places where home prices are skyrocketing or where housing stocks are scarce.
Lenders are also to stop making loans to people who haven't paid personal income tax or social security payments in the past 12 months in the places where they are seeking to buy homes. The council also said local governments will be allowed to set temporary limits on the number of homes a person can buy.
The latest government edict was certainly draconian enough. It came just two days after another notice from the State Council, which raised the down payment requirement on purchase of second homes to 50 percent from 40 percent. In January the central government reinstated a 5.5 percent tax on homes sold within five years of purchase to stop property churn. Previously the waiting time was two years.
The government is trying to send a strong signal that it will intervene, each time more aggressively, if the overheated property market doesn't start to cool.
At the same time as it tries to tighten lending, the government has also announced plans to more than double the land available for housing construction in China this year. And a significant proportion of the new supply will be earmarked for "affordable housing."
The government also said it will launch programs to renovate shantytown areas and older, rundown smaller apartment blocks.
Will it all work? That's what my friends have to ask themselves as they contemplate home purchases. It's also the question many speculators must be mulling over as they contemplate future investments.
Industry analysts remained divided. Some in the industry argue that if the government policies are intended to create two classes of property - controlled and affordable for the public at large; unfettered and market-driven for the rich, for overseas buyers and for property investors - it better move quickly.
Then, too, there are always concerns about how rigorously the government will monitor and enforce all these edicts.
To invest or not to invest? Over rooftop coffees, that is the question that gets more and more interesting by the day.
So it came as no surprise, when I sat down recently with friends at a sunny rooftop cafe, that I was quickly bombarded with questions about property.
Common queries include: "Will home prices in Shanghai continue to soar?" "Shall I buy an apartment now or wait another six months?" "Is property a good investment?"
Reporting on an industry is one thing. Dispensing professional advice as though I am an industry expert is quite another. One might even argue that there are no such things as experts, just opportunists. At any rate, I wasn't prepared to say anything that might cause someone to put possibly hundreds of thousands of yuan at risk.
One thing is certain. There is no certainty in investing. And the property market has become a lot riskier as the government intensifies its efforts to deflate a bubble that could pop and threaten the whole economy.
I am always happy to discuss with friends, or in this case readers, some of the issues that feed into the property debate.
Take Shanghai, for example. The average salary here rose 8.3 percent last year to 3,566 yuan (US$522) a month, said a report late last month released by the Shanghai Human Resources and Social Security Bureau.
At the same time, price of new homes, excluding those designated for relocated residents under urban redevelopment plans, jumped 16 percent last year to 16,188 yuan per square meter, according to Shanghai Uwin Real Estate Information Services Co.
In December 2009 alone, the average new home price reached 20,187 yuan per square meter in Shanghai.
The figures speak for themselves. Housing affordability is sinking fast, and the government is alarmed about that. It blames speculators - people who buy property to make money, rather than house their families. Often, the speculators are from out of town or even overseas. They, of course, are betting that prices will continue to rise.
The government is attempting to convince them they are wrong.
Last Saturday, the State Council, China's Cabinet, allowed banks to suspend loans to people who already have two houses and want to buy more. It also warned banks against extending credit to buyers seeking third and more homes in places where home prices are skyrocketing or where housing stocks are scarce.
Lenders are also to stop making loans to people who haven't paid personal income tax or social security payments in the past 12 months in the places where they are seeking to buy homes. The council also said local governments will be allowed to set temporary limits on the number of homes a person can buy.
The latest government edict was certainly draconian enough. It came just two days after another notice from the State Council, which raised the down payment requirement on purchase of second homes to 50 percent from 40 percent. In January the central government reinstated a 5.5 percent tax on homes sold within five years of purchase to stop property churn. Previously the waiting time was two years.
The government is trying to send a strong signal that it will intervene, each time more aggressively, if the overheated property market doesn't start to cool.
At the same time as it tries to tighten lending, the government has also announced plans to more than double the land available for housing construction in China this year. And a significant proportion of the new supply will be earmarked for "affordable housing."
The government also said it will launch programs to renovate shantytown areas and older, rundown smaller apartment blocks.
Will it all work? That's what my friends have to ask themselves as they contemplate home purchases. It's also the question many speculators must be mulling over as they contemplate future investments.
Industry analysts remained divided. Some in the industry argue that if the government policies are intended to create two classes of property - controlled and affordable for the public at large; unfettered and market-driven for the rich, for overseas buyers and for property investors - it better move quickly.
Then, too, there are always concerns about how rigorously the government will monitor and enforce all these edicts.
To invest or not to invest? Over rooftop coffees, that is the question that gets more and more interesting by the day.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
