Shanghai to douse flaming market with new measures

Shanghai to douse flaming market with new measures

The property market in China’s largest city is on fire. Could it be the next Vancouver?

With Shanghai’s home values shooting to fiery levels, the Chinese government is reportedly readying a new round of cooling measures.

Earlier this month, the Shanghai branch of the China Banking Regulatory Commission had met with banks to discuss several tightening measures, The Business Times reported, based on a tip from anonymous sources.

Bloomberg, also citing people familiar with the matter, reported that these measures will include requiring first-time buyers to fork out 50 percent of the property’s value as downpayment instead of the current 30 percent. The commission also plans to increase the loan-to-value ratio for second home purchases to 70 percent.

Shanghai officials acted to rein in renegade price growth as early as March with measures that include a requirement for prospective buyers to pay income taxes and social insurance for a minimum of five years.

More: High-end Shanghai office rents experience slowed growth

In data by the National Bureau of Statistics, average new home prices in Shanghai climbed 27 percent in July from a year earlier. Beijing and Shenzhen are not far behind, with increases of 21 percent and 41 percent, respectively.

Shanghai land values fetched an average floor price of CNY21,866 (USD3,300) per square metre this year, compared with CNY9,842 (USD1,475) per sq m in 2015, The Business Times reports.

On 17 August, a land parcel near Jing’an district sold at CNY100,315 (USD15,000) per sq m to Ronshine China Holdings Ltd — setting a new precedent for residential lots across the nation.

Knight Frank has ranked Shanghai next to Vancouver, a city that has seen its share of conflagration from Chinese buyers, in its latest Prime Global Cities Index.

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Source: Property Report