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Cautious buyers want 'pricey realty' to fall further

By Wang Ying (China Daily)
Updated: 2009-03-14 10:12

Standing in the Shanghai Spring Real Estate Fair hall awash with homebuyers, property developers and advertisers, Liu Weiping and his wife looked a bit disoriented. Although they have visited several exhibition booths and collected a handful of brochures, they are yet to zero in on their dream house.

Married last year, Liu and his wife stay at present with their parents in Pudong.

"We want to buy a flat of our own, with convenient public traffic facilities near the middle ring, and it is priced at around 15,000 yuan per sq m," said Liu.

But for many like Liu, who had anticipated steep discounts from developers due to the economic crisis, the dream home may still not be yet within their grasp.

"There has been no pull-back in prices. The flats are either too expensive or far away," Liu said.

Several others like Qiu who had taken a day off to find a suitable home returned home disappointed. "Our 60-sq-m room is too small for our needs, as my son is about to enter middle school. It seems unlikely that I would be able to find a two-bedroom apartment within the middle ring with a budget of 1 million yuan," said Qiu.

"Most of the unfurnished apartments within the middle ring are priced at about 20,000 yuan per sq m. That is an unreasonable charge," he said.

The 11th Shanghai Spring Real Estate Fair kicked off on a rainy day, but the humid weather and the showers did not deter the passion of homebuyers. At the fair, people were hustling and bustling as they searched for their ideal homes.

The fair, seen as the barometer for residential realty trading in Shanghai, had between 2004 and 2007 seen an increase in exhibition area and attendees. Things were not so good last year as the number of visitors and transaction volumes fell by 5 and 30 percent respectively.

This year the fair is expected to have exhibition space of 20,000 sq m, the same as last year. The number of exhibitors, however, fell 20 percent over last year to 120. "Given the global economic downturn, we understand that most of the visitors are here to find the best bargains," said Zhou Yu, a salesman with housing portal house.sina.com.

Chen Sheng, director, China Index Academy, told China Daily that affordability still remained the decisive factor in a home purchase.

"Visitors are always looking for the lowest price while the big property developers gather information and feedback from customers to adjust their pricing," Chen said.

In February, 787,600 sq m of residential floor space was traded in Shanghai, an increase of 61 percent from January, and a mammoth 129.09 percent increase year-on-year, said Lu Qilin, deputy director of Shanghai-based Uwin Real Estate Research Center.

Lu said the average housing price dropped about 13.94 percent in February month-on-month, but rose 9.37 percent year-on-year.

"There is a growing demand for residential housing due to marriages or for housing condition improvements. The demand has put a floor on the falling housing price," Lu said.

"In comparison to Beijing, Shanghai has a relatively healthy equilibrium of supply and demand, and the current housing stock can be consumed within six months. While it will take nearly two years for Beijing's market to digest the existing housing supply," said Chen of China Index Academy.

"We will not be able to afford an apartment for more than 1 million yuan, nor do we want to look for a flat beyond the middle ring. So I am afraid we have to wait a while to find the right house," said a disappointed Qiu.