Shanghai property curbs soon

By Wang Ying (China Daily)
Updated: 2010-05-13 10:30
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SHANGHAI - The Shanghai municipal government may release detailed regulations for the property sector in two weeks, in line with central government policies, to curb housing speculation and soaring prices in the local market, an industry insider said on Wednesday.

"A meeting will be held by the Shanghai municipal housing support and building administration bureau on Friday, and the main topic for discussion would be detailed regulations for the property sector," said Sun Lijian, a professor with Fudan University and an adviser to the local government.

On April 16, the State Council rolled out a series of measures to curb the domestic housing market amid concerns over asset bubbles. These measures include a 30 percent down payment for first time buyers for houses larger than 90 square meters, 50 percent down payment and lifting mortgage interest rate for second home buyers. The government has also imposed a temporary ban on mortgage applications for third or above home buys and cross-city purchases.

Shanghai will be the third region after Beijing and Shenzhen to have rules governing property buys, said Sun.

However, "the policies will not show much deviation from the government regulations and impose fresh curbs. Shanghai will make a prudent decision after seeing the feedback and effect of other local government rules", he said.

Homebuyers in Shanghai are keeping their fingers crossed and waiting for the actual regulations to come out before taking a decision on fresh buys, said industry sources.

On April 30, the Beijing municipal government came out with 11 detailed rules. In addition to the central government measures, Beijing also temporarily restricted new home buys to just one apartment from the time the rules were issued.

The Shanghai market has already felt the chill of the tightening housing policies with new apartment sales falling in April. Over 13,185 units of newly built apartments were traded in April, down 43.7 percent from the same period in 2009, according to data from China Real Estate Index System Shanghai.

Trading in the secondary market in Shanghai also saw a dramatic slump since April 16.

A total of 13,865 housing units changed hands between April 1 to 16, but only 7,974 units were traded from April 17 to 30, said Ma Ji, consulting manager at property consultancy Shanghai Centaline China.

Local media also reported that a property tax might be imposed in the next few months. Houses that fall into the definition for charging property tax will be levied an annual fee of as much as 8 percent of the apartment's total value, the Shanghai Securities News reported on Wednesday.

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Sun, however, is not too sure about the authenticity of the much-talked property tax. Considering the municipal government's cautious style, the property tax is more likely in two or three years time. "The existing policies are more than enough to cool property prices," he said.

"Furthermore, 8 percent tax is too high, especially on a yearly basis. To my understanding, 1 percent would be more reasonable, if at all such a tax has to be imposed," he said.

The new policies have already had its effect in terms of transactions and prices in key cities across the nation.

Statistics from China Index Academy said 26 out of the 35 major cities it monitors saw transactions dip in the last week of April, with an average fall of more than 20 percent.