Market revival seen as transactions increase 21pc amid hopes of more stimulus measures
Sandy Li 25 February 2009
Developers are hoping the warm spring weather being enjoyed in Shanghai will revive property prices.
They are also pinning hopes on more government stimulus measures coming out of next month’s top policy-setting meeting.
But an overhang of about 1 million square metres of new flats in the pipeline in the city would keep prices under downward pressure, warned some agents, irrespective of decisions taken at the forthcoming meetings of the National People’s Congress and Chinese People’s Political Consultative Conference.
Ricky Tam, a general manager at Centaline (China) in Shanghai, said he expected the overall volume of deals done in the city this month to be up 30 per cent from January.
But this followed steep price discounting and would not push prices higher because of the oversupply, he added.
During the week of February 16 to 22, a total of 3,315 units representing a total area of 349,330 square metres were sold in the city, according to website Soufun.com. This was up 21 per cent from the previous week.
“That suggests the ‘deep winter’ for the industry has almost come to an end,” said Mr. Tam. “Sentiment improved after the city government issued stimulus measures in December to revive buying interest to prevent a market slump.”
But although deal volumes were on the rise, prices continued to languish or fall, analysts said.
According to mainland reports, a unit in Casa Lakeville’s phase II development sold for as low as 45,000 yuan (HK$51,114) per square metre last month, compared with the peaks of 70,000 yuan and 100,000 yuan per square metre in June last year.
An agent said the seller was a Taiwanese investor who held several units at different luxury developments in Shanghai.
“After having the unit on sale for a year, the Taiwanese investor decided to sell at lower prices,” said the agent.
The Shanghai residential market has shown signs of weakness since the fourth quarter of 2007 but has been the target of several measures aimed at stimulating demand.
The latest measures rolled out this week include an announcement from the Shanghai municipal government that non-local property buyers would conditionally qualify for residency status.
The policy is targeted at those who come to Shanghai for business. If they remain in the city for at least seven years, they can apply for residency status.
“This will help to create buying demand as many businessmen from Suzhou and Ningbo have been setting up business operations in the city for years. They will now consider buying a permanent home in the city if they can qualify for residency status,” said Elsa Lai Chi-yin, a deputy general manager at Midland Realty’s Shanghai office.
Other measures include undertakings from the Shanghai Housing Fund to lend up to 600,000 yuan to help first-time homebuyers, up from a previous 200,000 yuan for applicants with two or more family members. The property deed tax has also been cut from 1.5 per cent to 1 per cent for units below 90 square metres.
Ms. Lai said an increasing number of buyers were now taking advantage of the measures as well as falling prices to trade up into bigger flats.
As a result, property prices in some centres such as Jingan and in locations that offered higher-quality residential projects had shown some resilience.
“Owners in these areas have a stronger holding ability and are reluctant to sell at steep discounts. Therefore transaction volumes in these districts increased by only about 10 per cent from a year ago,” she said.
Commenting on the recent sharp fall in secondary transaction prices at Casa Lakeville in the upmarket Xintiandi district, Mr. Tam said this could have been an individual case of a distressed sale.
He said the best of the bargain-hunting season could be coming to an end.
That remained to be seen, said analysts, but with new supply of about 1 million square metres plus 60,000 affordable homes to be rolled out this year, prices were likely to remain under pressure.
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Spring in Shanghai’s step after dark winter
Market revival seen as transactions increase 21pc amid hopes of more stimulus measures
Sandy Li
25 February 2009
Developers are hoping the warm spring weather being enjoyed in Shanghai will revive property prices.
They are also pinning hopes on more government stimulus measures coming out of next month’s top policy-setting meeting.
But an overhang of about 1 million square metres of new flats in the pipeline in the city would keep prices under downward pressure, warned some agents, irrespective of decisions taken at the forthcoming meetings of the National People’s Congress and Chinese People’s Political Consultative Conference.
Ricky Tam, a general manager at Centaline (China) in Shanghai, said he expected the overall volume of deals done in the city this month to be up 30 per cent from January.
But this followed steep price discounting and would not push prices higher because of the oversupply, he added.
During the week of February 16 to 22, a total of 3,315 units representing a total area of 349,330 square metres were sold in the city, according to website Soufun.com. This was up 21 per cent from the previous week.
“That suggests the ‘deep winter’ for the industry has almost come to an end,” said Mr. Tam. “Sentiment improved after the city government issued stimulus measures in December to revive buying interest to prevent a market slump.”
But although deal volumes were on the rise, prices continued to languish or fall, analysts said.
According to mainland reports, a unit in Casa Lakeville’s phase II development sold for as low as 45,000 yuan (HK$51,114) per square metre last month, compared with the peaks of 70,000 yuan and 100,000 yuan per square metre in June last year.
An agent said the seller was a Taiwanese investor who held several units at different luxury developments in Shanghai.
“After having the unit on sale for a year, the Taiwanese investor decided to sell at lower prices,” said the agent.
The Shanghai residential market has shown signs of weakness since the fourth quarter of 2007 but has been the target of several measures aimed at stimulating demand.
The latest measures rolled out this week include an announcement from the Shanghai municipal government that non-local property buyers would conditionally qualify for residency status.
The policy is targeted at those who come to Shanghai for business. If they remain in the city for at least seven years, they can apply for residency status.
“This will help to create buying demand as many businessmen from Suzhou and Ningbo have been setting up business operations in the city for years. They will now consider buying a permanent home in the city if they can qualify for residency status,” said Elsa Lai Chi-yin, a deputy general manager at Midland Realty’s Shanghai office.
Other measures include undertakings from the Shanghai Housing Fund to lend up to 600,000 yuan to help first-time homebuyers, up from a previous 200,000 yuan for applicants with two or more family members. The property deed tax has also been cut from 1.5 per cent to 1 per cent for units below 90 square metres.
Ms. Lai said an increasing number of buyers were now taking advantage of the measures as well as falling prices to trade up into bigger flats.
As a result, property prices in some centres such as Jingan and in locations that offered higher-quality residential projects had shown some resilience.
“Owners in these areas have a stronger holding ability and are reluctant to sell at steep discounts. Therefore transaction volumes in these districts increased by only about 10 per cent from a year ago,” she said.
Commenting on the recent sharp fall in secondary transaction prices at Casa Lakeville in the upmarket Xintiandi district, Mr. Tam said this could have been an individual case of a distressed sale.
He said the best of the bargain-hunting season could be coming to an end.
That remained to be seen, said analysts, but with new supply of about 1 million square metres plus 60,000 affordable homes to be rolled out this year, prices were likely to remain under pressure.
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