New policies in metropolis seen spurring property

Shanghai's latest policy measures on homebuying, including a subsidy of 200 million yuan ($29.75 million) for new purchases, will work together with existing measures to better tap into diversified residential needs and further consolidate the local housing market, industry experts said while studying the policy on Thursday.

The city, China's financial and economic powerhouse, on Thursday unveiled an eight-measure package designed to better meet people's essential needs and requirements for improved housing, with policies including trade-in subsidies for homebuyers, as well as optimizations to the housing provident fund and personal home mortgage policies.

"Featuring customized and differentiated measures tailored to the local housing market, the new policies are believed to further revitalize the local housing market by lowering homebuying barriers, cutting transaction costs, boosting demand for improved living and promoting the circulation of homes across the market," said Yan Yuejin, deputy head of the Shanghai-based E-House China R&D Institute.

"The measures come amid ongoing market stabilization and are projected to effectively boost market confidence and stimulate reasonable demand for both essential and improved living needs, thereby driving Shanghai's real estate market toward steady and healthy growth," Yan said.

Jointly launched by six government divisions including the Shanghai Municipal Commission of Housing and Urban-Rural Development, the Shanghai Municipal Bureau of Housing Management, the Shanghai Municipal Bureau of Finance and the Shanghai housing provident fund management center, the policies, effective on Aug 21, are tasked with promoting the stable and healthy development of the property sector, said the notification.

"The implementation of the newly introduced rules, tailored to homebuyers with requirements for improved living, is expected to place the city's housing market consolidation on a solid footing, especially during the upcoming traditional peak season for home transactions in September and October," said Lu Wenxi, an analyst at Centaline Shanghai.

Lu said Shanghai's housing market has been on a steady upward trajectory since the beginning of the year. The seven-item policy package, which includes lowering the purchase threshold for nonlocal buyers — launched in February alongside various existing measures — has not only supported housing demand, but also boosted property developers' confidence in a stable and positive market outlook.

Li Yujia, a researcher on residential policy in Guangdong province, expects the new policies will lower the threshold and boost homebuying activity in the remainder of the year.

"For the first time in its history, Shanghai launched subsidies for trade-in homebuying activities, a move expected to promote housing inventory destocking and streamline the circulation of home transactions in the market," said Li.

Li was referring to the combined value of the 200-million-yuan subsidies offered to people who buy new homes while selling their existing properties. According to the new measures, eligible homebuyers will receive a maximum subsidy of 50,000 yuan when they sell pre-owned homes and purchase newly built apartments.

Shanghai's new and pre-owned home markets showed a distinct transaction imbalance during the first half.

"As many as 172,000 units of existing homes changed hands between January and June, hitting a five-year high and staging a surge of 13.2 percent year-on-year. Against the thriving transaction volume in the secondary market, the new housing market has shrunk drastically. Only 2.23 million square meters of newly built residential apartments were sold during the first six months of this year, down 27.1 percent year-on-year. The transaction volume by floor area for second-hand homes is five times that of new homes, and the number of units is eight times that of new homes," Li said.

"Such divergent performances of new and existing homes result from the high cost of selling a preowned home and buying a new one. Specifically, the previous transaction process for people seeking better living conditions was not smooth enough," Li said, adding that most essential demand went to cost-effective pre-owned homes with preferred floor areas of below 110 sq m.

Lu said Shanghai's optimization measures came after a series of market consolidation signals from the central government, and are expected to unleash demand for improved living conditions by enhancing the transaction process.

The July 30 meeting of the Political Bureau of the Communist Party of China Central Committee — which set a direction for the country's economic work in the second half of the year — called for efforts to stabilize the property market and effectively build a security barrier for the sector.

Meanwhile, the State Council, the country's Cabinet, amended the regulations on housing provident fund management in a move set to take effect on Sept 20, which is expected to further unleash residential property-related consumption and thereby contribute to the overall housing market's recovery.

wang_ying@chinadaily.com.cn