Slide in price of housing speeds up
Updated: 2006-02-14 14:23
The cost of second-hand housing in Shanghai is dropping rapidly.The question
for buyers is whether the drop is a window of opportunity or the prelude to a
Prices are falling because of government measures to curb lending and halt
rampant speculation in a too-hot real-estate market.
Shanghai's benchmark index for second-hand housing prices recorded the
biggest drop last month in a downward trend that started last June and
accelerated before the Spring Festival, a traditionally low season for home
The index, which tracks the price and sales volume of Shanghai's preowned
housing, fell to 1625 in January, down 22 points, or 1.3 percent, from the
previous month, the Shanghai Existing Property Index Office reported yesterday.
The index started dropping 0.6 percent each month on average last June when
the government undertook strict measures to limit the overheated market.
Among 16 areas in 11 city districts surveyed, the sales price of second-hand
apartments in the Zhongshan Park area posted the biggest decline of 4.4 percent
to 10,457 yuan (US$1,307) a square meter last month.
Low-priced small apartments accounted for the majority of last month's sales,
which fell 40 to 50 percent from December, the report said.
"Investors can hardly be found for those transactions - buyers bought this
type of apartment for self use while sellers mainly sold to fund the initial
payment for a bigger flat to live in," said Huang Weiwei, an analyst with the
Many investors have chosen to lease property to avoid a 5 percent fee on the
value of an apartment sold within 24 months of ownership, a policy enacted last
A wave of speculators flooded the real-estate market from the second half of
2004 to the first half of last year, driving housing prices to an unprecedented
"Speculators who feel more financial constraint are struggling to find buyers
prepared to open their pockets at this moment," said Huang.
The Shanghai headquarters of the People's Bank of China said yesterday that
weak demand for new property loans caused by stagnant sales kept the city's
individual mortgage loan growth dipping in the second half of 2005.
It said individual mortgage loans, a barometer of activity in the residential
property market, gained 19.94 billion yuan (US$2.4 billion) in 2005, 52.9
billion yuan less than the growth in 2004.
The central bank expects Shanghai's GDP growth to slow to 10 percent this
year at a time of slowing growth of fixed assets investment and the property
The property market still cast a big shadow on the city's consumption,
investment and economic growth this year, the central bank said.
The city's economy expanded 11.1 percent in 2005.