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Rumor fuels home purchases in Shanghai

By Xie Jun (Global Times)    08:17, August 30, 2016

Further government policy won’t bring down prices: analysts

Commodity housing [Photo: Xinhua]

More than 1,600 new homes were purchased in Shanghai on Monday, the third day that the city's daily house trading volumes exceed 1,000, official data showed.

The sudden real estate boom was caused by recent rumors that the municipal government would soon roll out measures that would increase the cost of home purchases, industry insiders told the Global Times on Monday.

Data from the website of the Shanghai Real Estate Trading Center showed that 1,647 new houses were traded by 7:44 pm on Monday, with most transactions taking place in suburban districts like Pudong and Qingpu.

Over the weekend, home transaction numbers for Saturday were 1,056, while 1,247 houses were traded by 7:00 pm on Sunday, the yicai.com reported on Monday. In the past five days, about 5,000 homes in Shanghai have been bought.

Ping Fei, a Shanghai-based real estate agent working for 5i5j, told the Global Times on Monday that usually 200 new homes are bought and sold each day in Shanghai.

"About 40 home deals were made at the 5i5j branch where I work from Friday to Sunday," Ping said, adding that normally only about 10 homes are traded over a three-day period.

A report from thepaper.cn said that on Sunday, more than 1,000 people swarmed a real estate trading center in Pudong to complete the procedures for home purchases.

The yicai.com also noted that the Shanghai Real Estate Trading Center's computer system collapsed on Friday for a short period of time.

Housing policy rumors

According to Ping, the burst in Shanghai's real estate market is a result of recent buzz that the Shanghai municipal government would roll out a series of measures soon, possibly around Thursday, in an attempt to cool down the real estate market.

The new policies could include an increase in the down payment ratio for first homebuyers to 50 percent, up from the current 30 percent, Ping noted.

The government might also raise the benchmark interest rate on house loans by about 10 percent for certain homebuyers, Ping said.

Zhang Yanbing, a Shanghai-based real estate agent for Homelink, said that the government might also tighten the requirements for second home purchases.

A Shanghai resident surnamed Dai, who refused to disclose his full name, told the Global Times on Monday that some of his friends have been busy borrowing money in the last few days in order to buy homes before the rumored launch of those policies.

However, the Shanghai Housing and Urban-Rural Construction Management Committee said that they have not considered any such policies yet, according to a Weibo post from the Information Office of Shanghai Municipality on Monday afternoon.

Zhang said that even with the government refuting the rumor, it might still happen in the end.

High prices

The Shanghai municipal government launched a series of measures in March to control the housing market, such as requiring non-local residents to pay social security fees for five years, up from two years, before they can purchase property in Shanghai.

However, Ping said the March polices did not achieve their desired effect. "The house trading market cooled for a short period of time, about one month, before heating up again, and the house prices never fell," he said.

The fact that a number of "land king" transactions were made in Shanghai in recent weeks also shows that the city's house prices will not fall, Ping said.

However, Jiang Yining, an analyst from Capital Securities, said that the chances of the government rolling out such measures are small because the city's home prices and home trading have been kept at a relatively stable level in recent months.

"The government will not want the real estate sector, a strong pillar in the general economy, to slip too much," Jiang told the Global Times on Monday. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor: Yuan Can,Bianji)

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